UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
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STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE
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USA
TECHNOLOGIES, INC.
(Name of
Registrant as Specified In Its Charter)
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Person(s) Filing Proxy Statement, if other than the Registrant)
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Filed: December 3, 2009
The
following slide presentation was presented to RiskMetrics Group on December
3, 2009 by USA Technologies, Inc. (the "Company"), and may be used by
the Company to make presentations to other corporate governance organizations or
Company shareholders in the future.
Creating
Value Through Innovation
A
Leader in Cashless Transactions,
Networked Services, and Energy Management
Networked Services, and Energy Management
Investor
Presentation
December
2009
2
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 presentation, 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
presentation, 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 estimate, anticipate, or control its cash and non-cash expenses, costs, or charges; or the ability
of the Company to obtain widespread and continued commercial acceptance of it products or
services; 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 presentation speaks only as of the date of this presentation. 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.
statements other than statements of historical fact included in this presentation, 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
presentation, 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 estimate, anticipate, or control its cash and non-cash expenses, costs, or charges; or the ability
of the Company to obtain widespread and continued commercial acceptance of it products or
services; 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 presentation speaks only as of the date of this presentation. 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.
3
I. Introduction
II. Who We
Are and What We Do
III. Strategic
Positioning of USAT for Profitability and Sustainable Growth
IV. The
Board is in Place: Experienced and Committed to Enhancing
Shareholder Value
Shareholder Value
V. Dissidents
are the Wrong Choice for Shareholders and Bring Little
Experience
Experience
VI. Conclusion
and Recommendation
Agenda
4
• USAT’s Board and
management team have a sound
strategic plan
in place and have, on an ongoing basis, taken aggressive actions to increase
productivity, reduce costs and position the Company for profitable and sustainable
growth and success.
in place and have, on an ongoing basis, taken aggressive actions to increase
productivity, reduce costs and position the Company for profitable and sustainable
growth and success.
• Our strategic plan
calls for generating positive Net Income in quarter ending
December 2010.
December 2010.
• USAT has the
right
Board in place - Majority
independent, experienced and
committed to creating value for ALL shareholders. We recently added two highly-
qualified independent directors.
committed to creating value for ALL shareholders. We recently added two highly-
qualified independent directors.
• We are uncertain
about Brad Tirpak’s and Craig Thomas’ motives. They
are
direct owners of only approximately 1.1% of our common stock on the
record
date of our annual meeting, yet they are seeking Board representation equal to
37.5%.
date of our annual meeting, yet they are seeking Board representation equal to
37.5%.
• Electing Brad
Tirpak’s and Craig Thomas’ director nominees, including Brad Tirpak,
could undermine important business inroads the Company has made and
could jeopardize our plan for maximizing value for all shareholders.
could undermine important business inroads the Company has made and
could jeopardize our plan for maximizing value for all shareholders.
Introduction
5
USA
Technologies, Inc. founded in 1992.
• The Company is
recognized as a leading provider of wireless, cashless, micro-transactions
and
networking services to the unattended point of sale industries such as vending, kiosk and laundry.
We are also a provider of energy saving technology to the cold beverage industry.
networking services to the unattended point of sale industries such as vending, kiosk and laundry.
We are also a provider of energy saving technology to the cold beverage industry.
• The markets we
serve are vast and have traditionally relied on cash transactions. This is
changing.
Vending—8
million locations, $57B in sales, US1
Kiosk—1.15
million locations, $525B in sales, US2
Laundry—7.5
million in multi-family housing and 700,000 in universities, US3
Energy
Management—10 million coolers/4 million beverage vending machines,
US
• We provide a
turnkey, end-to-end, technology solution to our customers, including client
device,
deployment consulting services, and associated monthly network and financial services.
deployment consulting services, and associated monthly network and financial services.
• Our business model
consists of multiple revenue streams consisting of equipment sales and
activation fees; and recurring revenues which consist of monthly network service fees and
transaction fees.
activation fees; and recurring revenues which consist of monthly network service fees and
transaction fees.
• We have some of the
world's leading and well-established brands as customers, including
Coca-Cola,
PepsiCo, Compass/Canteen, Aramark and Marriott Hotels.
PepsiCo, Compass/Canteen, Aramark and Marriott Hotels.
• We have actively
sought to protect our intellectual property with 71 granted
patents.
Who
We Are
1.Vending
Times Census 2. the
IHL Group 3.
Company estimate
6
USA
Technologies has two core products/technology platforms that
support
our overall suite of services:
• Networking
for Data Management and Cashless Payment Processing
• Energy
Management.
Ø Our networking
platform enables PC and non-PC machines to be wirelessly connected to
accept
credit and debit cards for purchases, as well as remote monitoring and data gathering.
credit and debit cards for purchases, as well as remote monitoring and data gathering.
Ø This core
competency has been translated into bundled applications for a variety of
industries,
including Hospitality, Vending, Laundry and Kiosks.
including Hospitality, Vending, Laundry and Kiosks.
Ø Our back-end
payment processing system and special relationships with merchant banks make
it
possible for the micro-transactions that characterize these applications to be conducted with low
transaction fees, making credit and debit purchasing affordable and worthwhile to these service
providers for the first time.
possible for the micro-transactions that characterize these applications to be conducted with low
transaction fees, making credit and debit purchasing affordable and worthwhile to these service
providers for the first time.
Power-smart
products that conserve energy
Ø Our specialized and
comprehensive line of energy management products is designed to reduce
energy consumption on a number of products, including soda and snack vending machines,
coolers and office equipment, resulting in a significant reduction in both operating cost and
greenhouse gas emissions.
energy consumption on a number of products, including soda and snack vending machines,
coolers and office equipment, resulting in a significant reduction in both operating cost and
greenhouse gas emissions.
What
We Do
$199
$199
•Wireless, cashless
transaction system
•Fully integrated
one-piece design
•Compatible with
pre-pay program available through First Data
•Faster transaction
processing due to a more powerful processor
•Easier installation
- - 5 minutes
•Lower cost -
designed to accelerate adoption
Our
Products
7
New
ePort G8
• Wireless, cashless
transaction system
• Compatible with
many more unattended point-of-sale appliances
• 65% smaller than
G7 making it easier to install
• Compatible with
pre-pay and GoTag program available through First Data
• Combines
traditional mag-stripe and RF payment capabilities
• Lower
cost
Our
Products
$329
$329
8
ePort
SDK
The
SDK (Software Development Kit) enables kiosks, toll booths,
gaming units, venders, photo booths and other devices to accept
cashless payment.
gaming units, venders, photo booths and other devices to accept
cashless payment.
• End-to-end
encryption
• Compatible with any
Windows or Unix platform
parent applications
parent applications
• PCI DSS
compliant.
• Alternative to
Point-Of-Sale (POS) device.
Our
Products
9
• Less than 1 year
payback
• Saves up to 40% of
electric bill per unit
• Average electric
bill/unit ~ $300 per year
• Average sales price
of $90.00
• Initial market is
U.S. potential install base of 4
million refrigerated beverage vending machines
million refrigerated beverage vending machines
Projected
Customer Economics
Our
Products
10
• Less than 1 year
payback
• 15% increase in
sales
• Insulate
contracts/gain share
• Hardware cost
$200/unit
• $2.50/month/unit
network service contract per washer
and dryer.
and dryer.
Projected
Customer Economics
Online
availability of washers and dryers.
Payments via student ID or PIN“Cycle Done”
notification
Payments via student ID or PIN“Cycle Done”
notification
• Email
• Cell
Phone
• Pager
Our
Products
11
A
PCI compliant, end-to-end, suite of cashless
payment and telemetry services tailored to fit the
needs of self-service retail industries.
payment and telemetry services tailored to fit the
needs of self-service retail industries.
Card
Processing
Processing
Services
Wireless
Connectivity
Consumer
Services
Online
Sales
Reporting
Health
Alerts
Data
Security
Over
the Air
Updates &
DEX Data
Management
Updates &
DEX Data
Management
Settlement
Our
Products
12
Our
number one priority is to operate our business in order to
enhance shareholder value.
enhance shareholder value.
To that
end, management implemented a plan that includes the following
strategic
initiatives which seek to:
Strategic
Plan
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Generate
positive Net Income by the quarter ending December 31, 2010
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Focus on
increasing revenues, while also reducing costs
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Continue to
develop and innovate new products and services
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Focus on
generating value for our customers
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Add new highly
qualified directors to our Board
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Elements
Of The Plan
The
Plan is clearly focused on generating positive Net Income by the
quarter
ending December 31, 2010, and has the following elements:
ending December 31, 2010, and has the following elements:
Strategic
Plan
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Leveraging
our Existing Customers/Partners
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Focusing on
Diversifying our Customer Portfolio
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Expanding
Distribution in Core Markets
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Improving
Scalability
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Providing
Innovative Products and Services
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Leveraging
Intellectual Property
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Improving
Profit Margins
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Increasing
Revenues
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Reducing Cost
of Sales
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Reducing
Selling, General and Administrative (SG&A)
Expenses
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Inherent
in the Plan is a firm focus on the customer, a commitment to providing
superior
service, and a dedication to adding incremental value to our customers’ business each day.
service, and a dedication to adding incremental value to our customers’ business each day.
The
Company’s management, as overseen by the current Board, has
helped the Company achieve the following successful and positive position:
helped the Company achieve the following successful and positive position:
Our
Strategy IS Working
|
Cash at the
end of the last quarter ended September 30, 2009 was
$16.7
million. |
|
Virtually
debt free.
|
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Successful
launch of the innovative ePort G8™ and ePort EDGE™,
both
lower-cost, and more efficient cashless payment products. |
|
A diversified
and global base of approximately 700 customers has the
strength to increase market adoption. |
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An increase
in new ePort customers since June 30, 2009 to approximately
700 indicating that adoption is accelerating as cashless, self-service technology becomes more mainstream. |
16
Recent
achievements that may be credited to the successful execution
of the
Plan include:
Our
Strategy IS Working
|
Increased the
installed base of devices connected to the USALive® Network
by 36% to 57,000 in Q1 fiscal 2010, compared to Q1 fiscal 2009. This followed a 37% year-over-year increase in installed base in FY 2009 compared with FY 2008. |
|
Increased the
number of transactions processed to 7.4 million in Q1 of FY
2010, a 57% year-over-year quarterly increase; on top of a 97% year- over-year increase in FY 2009 vs. FY 2008 when transactions processed reached 22.3 million. |
|
Increased the
dollar value of transactions processed for the first quarter of
FY 2010 by 26% to $14.6 million over Q1 of FY 2009. |
17
Our
Strategy IS Working
|
Improved
gross margin percentage on equipment sales in the first quarter of
2010 to 32% from 30% a year ago. |
|
Further
reduced our SG&A expenses in Q1 FY 2010 by 20% from a year
ago.
|
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Increased our
revenues in Q1 of FY 2010 to $3.8 million, the highest level in
five quarters. |
|
Reduced
operating expenses in FY 2009 by approximately 28%, or
$16.8 million, compared with $20.6 million in FY 2008. The Company further reduced operating expenses by 19% to $4 million for Q1 of FY 2010, compared to $4.9 million in Q1 of FY 2009. |
• On June 30, 2009
USA Technologies (USAT) entered into a 3-year agreement
with FOODBUY, a procurement company affiliated with Compass Group
USA—the largest independent vending operator in the US—as the preferred
provider of credit/debit vending system and DEX telemetry hardware, as well as
backend services.
with FOODBUY, a procurement company affiliated with Compass Group
USA—the largest independent vending operator in the US—as the preferred
provider of credit/debit vending system and DEX telemetry hardware, as well as
backend services.
- FOODBUY's
committed customers include Compass Group, USA, its
affiliates
and franchisees.
- The
agreement specifies that FOODBUY will utilize USAT as the sole
credit/debit card vending hardware, software, and services provider
for no less than seventy-five percent (75%) of Compass Group’s
cashless payment solutions purchases.
credit/debit card vending hardware, software, and services provider
for no less than seventy-five percent (75%) of Compass Group’s
cashless payment solutions purchases.
• Compass Group, its
affiliates and franchisees can choose to purchase the ePort
device from USAT OR enter into the Quick Start Leasing Program for a 36-
month, non-cancelable term.
device from USAT OR enter into the Quick Start Leasing Program for a 36-
month, non-cancelable term.
• Each customer will
utilize the ePort Connect backend service as part of
the
Quick Start Leasing Program or a monthly service fee and has the right to
receive one DEX pull per day for an additional fee.
Quick Start Leasing Program or a monthly service fee and has the right to
receive one DEX pull per day for an additional fee.
Recent
Developments
Evidence
That Our Strategic Plan IS Working
18
USA
Technologies has approximately 700 distinct customers (e.g.
bottlers,
operators) with approximately 60,000 terminals on the ePort Connect Service.
operators) with approximately 60,000 terminals on the ePort Connect Service.
Cashless
Terminals Installed Base by Quarter
19
USAT
Results to Date
USA
Technologies is processing 7.4M transactions per quarter for its
customers.
Transaction
Volume by Quarter
$10 M
$7.5 M
$5 M
$2.5 M
$12.5
M
USAT
Results to Date
20
Operator
Demand
Consumer
Demand
• Focus on
convenience
• Desire for
electronic micro-
payments
payments
• 24/7
availability
• Key to increase
profit margin
• Meeting their
customer’s demand
• Wireless
connectivity provides
additional operational benefits
additional operational benefits
Market
Sponsorship
Technology
Improvements
• Wireless
reliability up/costs down
• Hardware costs
continue to
decline, increasing ROI of USAT
solutions
decline, increasing ROI of USAT
solutions
• MasterCard and
others are
driving broader market
acceptance
driving broader market
acceptance
• Recent debit card
legislation
maximizes market
size/opportunity
maximizes market
size/opportunity
USAT
believes that the confluence of several compelling factors will
continue to drive accelerated vending market adoption near and long term.
continue to drive accelerated vending market adoption near and long term.
21
Key
Industry Trends
22
Nilson
Report named USAT as
#6 in U.S. for Point of Sale
Terminal shipments.
#6 in U.S. for Point of Sale
Terminal shipments.
USAT
Results
23
Given
the trends in the marketplace and as seen through the Company’s own
data,
management anticipates achieving the following milestones as our installed base
continues to increase:
management anticipates achieving the following milestones as our installed base
continues to increase:
• Quarter ending
March 31, 2010 - Connections to the network are anticipated to be
71,000 by the end of the quarter.
71,000 by the end of the quarter.
•Quarter ending
March 31, 2010 - Company expects lowest Net Income loss since listing
on NASDAQ
on NASDAQ
• Quarter ending
June 30, 2010 - Connections to the network are anticipated to be 81,000
by the end of the quarter.
by the end of the quarter.
• Quarter ending
September 30, 2010 - Connections to the network are anticipated to be
95,000 by the end of the quarter.
95,000 by the end of the quarter.
• Quarter ending
December 31, 2010 - Connections to the network are anticipated to be
114,000 by the end of the quarter with reported positive Net Income.
114,000 by the end of the quarter with reported positive Net Income.
Roadmap
to Profitability
24
Roadmap
to Profitability
25
• Vastly
expanded market with limited competition
• World
class products and services to address market needs
• Positive
results for partners and customers
• Rising
revenues, margins and reduced SG&A
• 71
patents issued to protect the Company’s IP
• Diversified
product line, customer base and revenue streams
• Dedicated
and talented management team with a strategic plan
All
leading to a profitable, world-class company
Our
Company is Exceptionally
Well-positioned for a Bright Future
Well-positioned for a Bright Future
26
George
R. Jensen, Jr., Chairman of the Board and Chief Executive Officer
Mr.
Jensen has been the Chief Executive Officer and Director of USA Technologies
since January 1992. He is the founder,
and was Chairman, Director, and Chief Executive Officer of American Film Technologies, Inc. ("AFT") from 1985 until
1992. AFT was in the business of creating color imaged versions of black-and-white films. From 1979 to 1985, Mr. Jensen
was Chief Executive Officer and President of International Film Productions, Inc. From 1971 to 1978, Mr. Jensen was a
securities broker, primarily for the firm of Smith Barney, Harris Upham. He was chosen 1989 Entrepreneur of the Year in
the high technology category for the Philadelphia, Pennsylvania area by Ernst & Young LLP and Inc. Magazine. Mr. Jensen
received his Bachelor of Science Degree from the University of Tennessee and is a graduate of the Advanced
Management Program at the Wharton School of the University of Pennsylvania.
and was Chairman, Director, and Chief Executive Officer of American Film Technologies, Inc. ("AFT") from 1985 until
1992. AFT was in the business of creating color imaged versions of black-and-white films. From 1979 to 1985, Mr. Jensen
was Chief Executive Officer and President of International Film Productions, Inc. From 1971 to 1978, Mr. Jensen was a
securities broker, primarily for the firm of Smith Barney, Harris Upham. He was chosen 1989 Entrepreneur of the Year in
the high technology category for the Philadelphia, Pennsylvania area by Ernst & Young LLP and Inc. Magazine. Mr. Jensen
received his Bachelor of Science Degree from the University of Tennessee and is a graduate of the Advanced
Management Program at the Wharton School of the University of Pennsylvania.
Stephen
P. Herbert, President and Chief Operating Officer
Mr.
Herbert was elected a Director of USA Technologies in April 1996, and joined USA
Technologies on a full-time basis on
May 6, 1996 as Executive Vice President. Mr. Herbert was appointed President and Chief Operating Officer of the
Company. Prior to joining USA Technologies and since 1986, Mr. Herbert had been employed by Pepsi-Cola, the beverage
division of PepsiCo, Inc. From 1994 to April 1996, he was a Manager of Market Strategy. In that position he was
responsible for directing development of market strategy for the vending channel and subsequently the supermarket
channel for Pepsi-Cola in North America. Prior to that, Mr. Herbert held various sales, marketing, operations and
management positions with the Pepsi-Cola Company. Mr. Herbert graduated with a Bachelor of Science degree from
Louisiana State University.
May 6, 1996 as Executive Vice President. Mr. Herbert was appointed President and Chief Operating Officer of the
Company. Prior to joining USA Technologies and since 1986, Mr. Herbert had been employed by Pepsi-Cola, the beverage
division of PepsiCo, Inc. From 1994 to April 1996, he was a Manager of Market Strategy. In that position he was
responsible for directing development of market strategy for the vending channel and subsequently the supermarket
channel for Pepsi-Cola in North America. Prior to that, Mr. Herbert held various sales, marketing, operations and
management positions with the Pepsi-Cola Company. Mr. Herbert graduated with a Bachelor of Science degree from
Louisiana State University.
William
L. VanAlen, Jr., Director
Mr.
VanAlen joined the Board of Directors in May 1993. He is President of
Cornerstone Entertainment, Inc., an
organization engaged in the production of feature films, of which he was a founder in 1985. Since 1996, Mr. VanAlen has
been President and a Director of The Noah Fund, a publicly traded mutual fund. Prior to 1985, Mr. VanAlen practiced law
in Pennsylvania for twenty-two years. He received his undergraduate degree in Economics from the University of
Pennsylvania and his law degree from Villanova Law School.
organization engaged in the production of feature films, of which he was a founder in 1985. Since 1996, Mr. VanAlen has
been President and a Director of The Noah Fund, a publicly traded mutual fund. Prior to 1985, Mr. VanAlen practiced law
in Pennsylvania for twenty-two years. He received his undergraduate degree in Economics from the University of
Pennsylvania and his law degree from Villanova Law School.
Steven
Katz, Director
Mr.
Katz joined the Board of Directors in May 1999. He is President of Steven Katz
& Associates, Inc., a management
consulting firm specializing in strategic planni+ng and corporate development for technology and service-based
companies in the health care, environmental, telecommunications and Internet markets. Mr. Katz's prior experience
includes management positions with Price Waterhouse & Co., Revlon, Inc., National Patent Development Corporation
(NPDC) and two years as a Vice President and General Manager of a non-banking division of Citicorp, N.A.
consulting firm specializing in strategic planni+ng and corporate development for technology and service-based
companies in the health care, environmental, telecommunications and Internet markets. Mr. Katz's prior experience
includes management positions with Price Waterhouse & Co., Revlon, Inc., National Patent Development Corporation
(NPDC) and two years as a Vice President and General Manager of a non-banking division of Citicorp, N.A.
Committed
and Engaged Board
Committed
and Engaged Board
Douglas
M. Lurio, Director
Mr.
Lurio joined the Board of Directors in June 1999. He is President of Lurio &
Associates, P.C.. He specializes in the
practice of corporate and securities law. Previously he was a partner with Dilworth, Paxson LLP. Mr. Lurio received a
Bachelor of Arts Degree in Government from Franklin & Marshall College, a Juris Doctor Degree from Villanova Law
School, and a Masters in Law (Taxation) from Temple Law School.
practice of corporate and securities law. Previously he was a partner with Dilworth, Paxson LLP. Mr. Lurio received a
Bachelor of Arts Degree in Government from Franklin & Marshall College, a Juris Doctor Degree from Villanova Law
School, and a Masters in Law (Taxation) from Temple Law School.
Joel
Brooks, Director
Joel
Brooks joined the Board of Directors of the Company in March 2007. Since
December 2000, he has served as the
CFO and Treasurer of Senesco Technologies, Inc., a biotechnology company whose shares are traded on the American
Stock Exchange. From September 1998 until November 2000, Mr. Brooks was the CFO of Blades Board and Skate, LLC,
a retail establishment specializing in the action sports industry. Mr. Brooks received his Bachelor of Science degree in
Commerce with a major in Accounting from Rider University.
CFO and Treasurer of Senesco Technologies, Inc., a biotechnology company whose shares are traded on the American
Stock Exchange. From September 1998 until November 2000, Mr. Brooks was the CFO of Blades Board and Skate, LLC,
a retail establishment specializing in the action sports industry. Mr. Brooks received his Bachelor of Science degree in
Commerce with a major in Accounting from Rider University.
Steven
D. Barnhart, Director
Steven
Barnhart
has
successfully led technology and consumer product companies through rapid growth
and change.
He joined the Board in 2009 and is experienced in creating and executing strategies for both public and private equity
backed companies. He has developed and executed growth strategies in online commerce, technology, consumer
packaged goods and retail distribution. Most recently, Mr. Barnhart was CEO and President of Orbitz Worldwide, from
2007-2009, after holding other executive positions since 2003. Prior to Orbitz Worldwide he worked for PepsiCo and the
Pepsi Bottling Group from 1990-2003, where he was Finance Director for the Southeast Business Unit of the Pepsi
Bottling Group, and also held other regional and strategic positions for PepsiCo and Frito-Lay.
He joined the Board in 2009 and is experienced in creating and executing strategies for both public and private equity
backed companies. He has developed and executed growth strategies in online commerce, technology, consumer
packaged goods and retail distribution. Most recently, Mr. Barnhart was CEO and President of Orbitz Worldwide, from
2007-2009, after holding other executive positions since 2003. Prior to Orbitz Worldwide he worked for PepsiCo and the
Pepsi Bottling Group from 1990-2003, where he was Finance Director for the Southeast Business Unit of the Pepsi
Bottling Group, and also held other regional and strategic positions for PepsiCo and Frito-Lay.
Jack E.
Price, Director
Jack
Price
joined
the Board in 2009. Has had a successful record of building and growing
businesses in Fortune 100
domestic and international markets. He has been recognized for his leadership in operations, sales, marketing,
acquisitions, acquisition integration and organizational and process re-engineering. Mr Price served as President and
CEO of NovaRay Medical Inc., from 2007-2009. Prior to that, he was President and CEO of VSM MedTech Ltd. from
2003-2006, and was President and Division CEO of Philips Medical Systems from 1996-2003, having joined Philips
Medical Systems in 1993 as Vice President and General Manager. He was also with General Electric Medical Systems
from 1988-1993, where he held Vice President and General Manager positions.
domestic and international markets. He has been recognized for his leadership in operations, sales, marketing,
acquisitions, acquisition integration and organizational and process re-engineering. Mr Price served as President and
CEO of NovaRay Medical Inc., from 2007-2009. Prior to that, he was President and CEO of VSM MedTech Ltd. from
2003-2006, and was President and Division CEO of Philips Medical Systems from 1996-2003, having joined Philips
Medical Systems in 1993 as Vice President and General Manager. He was also with General Electric Medical Systems
from 1988-1993, where he held Vice President and General Manager positions.
27
28
• Active
and Engaged Board that Adds Value. Board has a
detailed
understanding of the strategic plan in place which is aimed at maximizing
value for all shareholders.
understanding of the strategic plan in place which is aimed at maximizing
value for all shareholders.
- At a
time when many businesses are faltering due to poor
economic conditions, USAT has continued to produce steady and
improved results. To date, execution of the strategic plan has
resulted in improving quarterly results, consistent reduction in
losses, creation of broad customer base and development of four
new promising products.
economic conditions, USAT has continued to produce steady and
improved results. To date, execution of the strategic plan has
resulted in improving quarterly results, consistent reduction in
losses, creation of broad customer base and development of four
new promising products.
• Receptive
Board Providing Strategic Guidance. Board is open to
the
views of all shareholders and is actively engaged in building value and
positioning the Company for profitable growth.
views of all shareholders and is actively engaged in building value and
positioning the Company for profitable growth.
The
USAT Board is the Right Board
We are
positioned to continue executing our Strategic Plan with
the help
of:
• A management team
with industry expertise, market knowledge, ability to
forge unique customer relationships and technological expertise to create
and roll out products;
forge unique customer relationships and technological expertise to create
and roll out products;
• An independent and
highly qualified Board of Directors with industry and
management experience to complement and oversee the Company’s
strategic and innovative objectives;
management experience to complement and oversee the Company’s
strategic and innovative objectives;
• Directors who
possess specific industry expertise and an in-depth
knowledge of our business model;
knowledge of our business model;
• Directors who
possess extensive operating experience that includes a track
record of success combined with the required skills to successfully execute
our strategic plan.
record of success combined with the required skills to successfully execute
our strategic plan.
An
Experienced Board and
Management Team
Management Team
29
30
Setting
the Record Straight
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%.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.
“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%.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.
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.
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.
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.
31
Bradley
Tirpak Settled Securities Fraud Action and Has No Public Company
Leadership
Mr.
Tirpak is a former hedge fund manager. Mr. Tirpak was one of two defendants in a
class action lawsuit
alleging securities fraud that was settled through the payment of $2,250,000. See:
“http://www.usatech.com/dl/class_action_litigation.pdf” for certain court documents relating to the class action.
Several of the hedge firms he worked for in the past have strategies of high-portfolio turnovers, with no apparent
interest in creating long-term value.
alleging securities fraud that was settled through the payment of $2,250,000. See:
“http://www.usatech.com/dl/class_action_litigation.pdf” for certain court documents relating to the class action.
Several of the hedge firms he worked for in the past have strategies of high-portfolio turnovers, with no apparent
interest in creating long-term value.
Alan
Gotcher Was Forced to Resign From Altair Technologies (ALTI), Which Has
Posted
Approximately $77 Million in Losses over the Last Three Years
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.”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 164,716 shares of Altair’s common stock representing only 0.19% of the issued and
outstanding shares. Further, according to publicly filed documents of Altair, for 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), of which $459,451 was discretionary.
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.”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 164,716 shares of Altair’s common stock representing only 0.19% of the issued and
outstanding shares. Further, according to publicly filed documents of Altair, for 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), of which $459,451 was discretionary.
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
a $4.3 Million Market Cap and $22.4 Million In Negative Shareholder Equity
Since
August 4, 2006, Mr. 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, the Company had a
loss of $5,825,000, and had revenues of only $9,702,000. Mr. Michel currently directly owns only 80,630 shares of
iSECUREtrac’s common stock, representing only 0.69% of the issued and outstanding shares. 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.
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, the Company had a
loss of $5,825,000, and had revenues of only $9,702,000. Mr. Michel currently directly owns only 80,630 shares of
iSECUREtrac’s common stock, representing only 0.69% of the issued and outstanding shares. 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.
SAVE
Committee Offers Little
32
The
Choice is Clear
• The strategic plan
we are executing is evidence of our commitment to grow
shareholder value.
shareholder value.
• We have a skilled,
highly professional and experienced team in place to accomplish
this.
this.
• We have increased
our 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
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
• We ranked #6 by the
Nilson Report (September 2009) for POS terminals shipped
2008, US.
2008, US.
• We have added two
highly qualified independent directors to a Board within the past
two months
two months
• Our Board is deep
in experience and is committed to maximizing shareholder value
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
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
33
• USA Technologies is
extremely well-positioned for sustainable, long-term growth
• The Company has
built momentum to become profitable and report positive Net
Income in the quarter ending December 31, 2010
Income in the quarter ending December 31, 2010
• Management and the
Board of Directors are committed and engaged to increase
revenues and profits, reduce cost, and build product adaptability
revenues and profits, reduce cost, and build product adaptability
• The Company
anticipates an increase in connections on the Company's network
from 57,000 at the end of September 30, 2009 to 114,000 connections at
December 31, 2010
from 57,000 at the end of September 30, 2009 to 114,000 connections at
December 31, 2010
• The Company has
introduced four new products that help customers increase
their revenues and reduce cost
their revenues and reduce cost
• Brad Tirpak and
Craig Thomas and their nominees lack industry experience and
knowledge, and have no strategic plan
knowledge, and have no strategic plan
PROTECT THE VALUE
OF YOUR INVESTMENT.
VOTE
“FOR” USAT’S DIRECTORS
ON THE
WHITE PROXY
CARD
Conclusion
and Recommendation
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 and a proxy statement
supplement dated December 2, 2009. 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 and supplement as these documents contain important
information. Shareholders may obtain an additional copy of USAT’s
definitive proxy statement and supplement as well as 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 and supplement 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 and in USAT’s supplement to
proxy statement filed with the SEC on December 2, 2009.