UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
1O-Q
(Mark
One)
|
S
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended March
31, 2008
|
£
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF
1934
|
For the
transition period from ____________________ to
_____________________
Commission
file number 001-33365
USA
Technologies, Inc.
(Exact
name of registrant as specified in its charter)
|
Pennsylvania
|
23-2679963
|
|
(State
or other jurisdiction of incorporation)
|
(I.R.S.
employer Identification No.)
|
|
100 Deerfield Lane,
Suite 140, Malvern, Pennsylvania
|
19355
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(610)
989-0340
(Registrant's
telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
and large accelerated filer” in Rule 12b-2 of the Exchange Act.
|
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).Yes o No x
As April
25, 2008, there were 15,138,470 shares of Common Stock, no par value,
outstanding.
USA
TECHNOLOGIES, INC.
TABLE OF
CONTENTS
|
PAGE NO.
|
||
|
Part I - Financial
Information
|
||
|
Item
1.
|
Financial
Statements (Unaudited)
|
|
|
3
|
||
|
4
|
||
|
5
|
||
|
6
|
||
|
7
|
||
|
2.
|
16
|
|
|
3.
|
21
|
|
|
4T.
|
21
|
|
| Part II - Other Information | ||
|
Item
2.
|
22
|
|
|
3.
|
22
|
|
|
4.
|
22
|
|
|
6.
|
23
|
|
|
24
|
||
USA
Technologies, Inc.
Consolidated
Balance Sheets
|
March 31,
|
June 30,
|
|||||||
|
2008
|
2007
|
|||||||
|
Assets
|
(Unaudited)
|
|||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 6,814,731 | $ | 5,163,844 | ||||
|
Available-for-sale
securities
|
7,575,000 | 6,350,000 | ||||||
|
Accounts
receivable, less allowance for uncollectible accounts of approximately
$129,000 at March 31, 2008 and $142,000 at June 30,
2007
|
2,250,227 | 2,269,193 | ||||||
|
Finance
receivables
|
379,620 | 330,692 | ||||||
|
Inventory,
net
|
2,258,046 | 3,033,792 | ||||||
|
Prepaid
expenses and other current assets
|
489,792 | 206,508 | ||||||
|
Total
current assets
|
19,767,416 | 17,354,029 | ||||||
|
Available-for-sale
securities
|
6,575,000 | - | ||||||
|
Finance
receivables, less current portion
|
518,222 | 279,324 | ||||||
|
Property
and equipment, net
|
2,054,877 | 1,876,754 | ||||||
|
Intangibles,
net
|
6,194,582 | 7,122,032 | ||||||
|
Goodwill
|
7,663,208 | 7,663,208 | ||||||
|
Other
assets
|
201,195 | 196,150 | ||||||
|
Total
assets
|
$ | 42,974,500 | $ | 34,491,497 | ||||
|
Liabilities
and shareholders’ equity
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 3,285,408 | $ | 3,945,894 | ||||
|
Accrued
expenses
|
2,266,230 | 1,431,652 | ||||||
|
Current
obligations under long-term debt
|
656,454 | 514,302 | ||||||
|
Total
current liabilities
|
6,208,092 | 5,891,848 | ||||||
|
Long-term
debt, less current portion
|
522,346 | 515,443 | ||||||
|
Total
liabilities
|
6,730,438 | 6,407,291 | ||||||
|
Commitments
and contingencies (Note 6)
|
||||||||
|
Shareholders’
equity:
|
||||||||
|
Preferred
stock, no par value:
|
||||||||
|
Authorized
shares- 1,800,000
|
||||||||
|
Series
A convertible preferred- Authorized shares-900,000; Issued and outstanding
shares- 520,392 as of March 31, 2008 and as of June 30, 2007 (liquidation
preference of $14,586,926 and $14,196,632, respectively)
|
3,686,218 | 3,686,218 | ||||||
|
Common
stock, no par value:
|
||||||||
|
Authorized
shares- 640,000,000;
|
||||||||
|
Issued
and outstanding shares- 15,138,470 at March 31, 2008 and 11,810,849 at
June 30, 2007
|
193,645,925 | 172,822,868 | ||||||
|
Accumulated
deficit
|
(161,088,081 | ) | (148,424,880 | ) | ||||
|
Total
shareholders’ equity
|
36,244,062 | 28,084,206 | ||||||
|
Total
liabilities and shareholders’ equity
|
$ | 42,974,500 | $ | 34,491,497 | ||||
See
accompanying notes.
USA
Technologies, Inc.
Consolidated
Statements of Operations
(Unaudited)
|
Three
months ended
March 31,
|
Nine
months ended
March 31,
|
|||||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Revenues:
|
||||||||||||||||
|
Equipment
sales
|
$ | 3,220,397 | $ | 2,279,452 | $ | 8,501,722 | $ | 5,604,573 | ||||||||
|
License
and transaction fees
|
1,043,115 | 410,962 | 2,576,849 | 1,106,460 | ||||||||||||
|
Total
revenues
|
4,263,512 | 2,690,414 | 11,078,571 | 6,711,033 | ||||||||||||
|
Cost
of equipment
|
2,563,596 | 2,022,159 | 6,592,088 | 4,610,096 | ||||||||||||
|
Cost
of services
|
804,194 | 350,315 | 2,028,675 | 883,272 | ||||||||||||
|
Cost
of sales
|
3,367,790 | 2,372,474 | 8,620,763 | 5,493,368 | ||||||||||||
|
Gross
profit
|
895,722 | 317,940 | 2,457,808 | 1,217,665 | ||||||||||||
|
Operating
expenses:
|
||||||||||||||||
|
Selling,
general and administrative
|
4,392,292 | 3,600,544 | 14,226,973 | 10,406,775 | ||||||||||||
|
Depreciation
and amortization
|
490,093 | 428,275 | 1,497,768 | 1,284,771 | ||||||||||||
|
Total
operating expenses
|
4,882,385 | 4,028,819 | 15,724,741 | 11,691,546 | ||||||||||||
|
Operating
loss
|
(3,986,663 | ) | (3,710,879 | ) | (13,266,933 | ) | (10,473,881 | ) | ||||||||
|
Other
expense:
|
||||||||||||||||
|
Interest
income
|
264,567 | 105,705 | 716,120 | 164,817 | ||||||||||||
|
Interest
expense:
|
||||||||||||||||
|
Coupon
or stated rate
|
(38,450 | ) | (175,288 | ) | (112,388 | ) | (771,479 | ) | ||||||||
|
Non-cash
interest and amortization of debt discount
|
- | (338,996 | ) | - | (1,096,317 | ) | ||||||||||
|
Total
interest expense
|
(38,450 | ) | (514,284 | ) | (112,388 | ) | (1,867,796 | ) | ||||||||
|
Total
other income (expense)
|
226,117 | (408,579 | ) | 603,732 | (1,702,979 | ) | ||||||||||
|
Net
loss
|
(3,760,546 | ) | (4,119,458 | ) | (12,663,201 | ) | (12,176,860 | ) | ||||||||
|
Cumulative
preferred dividends
|
(390,294 | ) | (390,294 | ) | (780,588 | ) | (781,451 | ) | ||||||||
|
Loss
applicable to common shares
|
$ | (4,150,840 | ) | $ | (4,509,752 | ) | $ | (13,443,789 | ) | $ | (12,958,311 | ) | ||||
|
Loss
per common share (basic and diluted)
|
$ | (0.28 | ) | $ | (0.45 | ) | $ | (0.97 | ) | $ | (1.65 | ) | ||||
|
Weighted
average number of common shares outstanding (basic and
diluted)
|
15,023,313 | 9,652,693 | 13,837,206 | 7,770,543 | ||||||||||||
See
accompanying notes.
USA
Technologies, Inc.
Consolidated
Statement of Shareholders’ Equity
(Unaudited)
|
Series A
Convertible
Preferred
Stock
|
Common
Stock
|
Accumulated
Deficit
|
Total
|
|||||||||||||
|
Balance,
June 30, 2007
|
$ | 3,686,218 | $ | 172,822,868 | $ | (148,424,880 | ) | $ | 28,084,206 | |||||||
|
Issuance
of 2,142,871 shares of common stock to an accredited investor at $7.00 per
share, less issuance costs of $1,012,597
|
- | 13,987,500 | - | 13,987,500 | ||||||||||||
|
Issuance
of 886,908 shares of common stock to an accredited investor at varying
prices per share, less issuance costs of $1,410
|
- | 5,671,847 | - | 5,671,847 | ||||||||||||
|
Exercise
of 58,543 warrants at $6.40 per share
|
- | 374,675 | - | 374,675 | ||||||||||||
|
Retirement
of 650 shares of common stock
|
- | (5,600 | ) | - | (5,600 | ) | ||||||||||
|
Issuance
of 14,700 shares of common stock to employees under the 2007-A Stock
Compensation Plan
|
- | 138,704 | - | 138,704 | ||||||||||||
|
Reclassification
of charges from Long-Term Equity Incentive Program for Fiscal Year 2007 to
a share-based liability until settlement
|
- | (599,311 | ) | - | (599,311 | ) | ||||||||||
|
Issuance
of 225,249 shares of common stock for settlement of the Long-Term Equity
Incentive Program liability for Fiscal Year 2007
|
- | 1,189,222 | - | 1,189,222 | ||||||||||||
|
Charges
incurred in connection with stock options
|
- | 66,020 | - | 66,020 | ||||||||||||
|
Net
loss
|
- | - | (12,663,201 | ) | (12,663201 | ) | ||||||||||
|
Balance,
March 31, 2008
|
$ | 3,686,218 | $ | 193,645,925 | $ | (161,088,081 | ) | $ | 36,244,062 | |||||||
See
accompanying notes.
USA
Technologies, Inc.
Consolidated
Statements of Cash Flows
(Unaudited)
|
Nine
months ended
|
||||||||
|
March 31,
|
||||||||
|
2008
|
2007
|
|||||||
|
Operating
activities
|
||||||||
|
Net
loss
|
$ | (12,663,201 | ) | $ | (12,176,860 | ) | ||
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
|
Charges
incurred in connection with the vesting and issuance of common
stock for employee compensation
|
1,157,540 | 928,843 | ||||||
|
Charges
incurred in connection with stock options
|
66,020 | 283,028 | ||||||
|
Non-cash
interest and amortization of debt discount
|
- | 1,096,317 | ||||||
|
Charges
incurred in connection with the issuance of common stock for legal
settlements
|
- | 288,000 | ||||||
|
Gain
on repayment of senior notes
|
- | (44,285 | ) | |||||
|
Bad
debt expense
|
137,212 | 45,327 | ||||||
|
Amortization
|
927,450 | 927,450 | ||||||
|
Depreciation
|
570,318 | 357,321 | ||||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Accounts
receivable
|
(118,246 | ) | (1,693,169 | ) | ||||
|
Finance
receivables
|
(287,826 | ) | 8,486 | |||||
|
Inventory
|
775,746 | (538,104 | ) | |||||
|
Prepaid
expenses and other assets
|
(84,552 | ) | 41,935 | |||||
|
Accounts
payable
|
(660,486 | ) | (132,754 | ) | ||||
|
Accrued
expenses
|
405,653 | (288,645 | ) | |||||
|
Net
cash used in operating activities
|
(9,774,372 | ) | (10,897,110 | ) | ||||
|
Investing
activities
|
||||||||
|
Purchase
of property and equipment, net
|
(528,110 | ) | (334,454 | ) | ||||
|
Net
purchases of available-for-sale securities
|
(7,800,000 | ) | (7,000,000 | ) | ||||
|
Net
cash used in investing activities
|
(8,328,110 | ) | (7,334,454 | ) | ||||
|
Financing
activities
|
||||||||
|
Net
proceeds from the issuance of common stock and exercise of common
stock warrants
|
20,028,422 | 26,967,182 | ||||||
|
Collection
of subscriptions receivable
|
- | 3,234 | ||||||
|
Proceeds
from the issuance of long-term debt
|
332,740 | 470,000 | ||||||
|
Repayment
of long-term debt
|
(607,793 | ) | (177,151 | ) | ||||
|
Repayment
of senior notes
|
- | (6,198,476 | ) | |||||
|
Net
cash provided by financing activities
|
19,753,369 | 21,064,789 | ||||||
|
Net
increase in cash and cash equivalents
|
1,650,887 | 2,833,225 | ||||||
|
Cash
and cash equivalents at beginning of period
|
5,163,844 | 2,866,801 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 6,814,731 | $ | 5,700,026 | ||||
|
Supplemental
disclosures of cash flow information:
|
||||||||
|
Cash
paid for interest
|
$ | 126,962 | $ | 899,272 | ||||
|
Equipment
under capital lease
|
$ | 220,331 | $ | 436,173 | ||||
|
Prepaid
insurance financed with long-term debt
|
$ | 203,777 | $ | - | ||||
|
Conversion
of senior notes to common stock
|
$ | - | $ | 500 | ||||
|
Conversion
of convertible preferred stock to common stock
|
$ | - | $ | 8,142 | ||||
|
Conversion
of convertible preferred dividends to common stock
|
$ | - | $ | 15,000 | ||||
|
Subscription
receivable
|
$ | - | $ | 340,000 | ||||
|
Common
stock issued to settle lawsuits
|
$ | - | $ | 288,000 | ||||
See
accompanying notes.
USA
Technologies, Inc.
Notes to Consolidated Financial Statements
|
1.
|
Accounting
Policies
|
Business
USA
Technologies, Inc. (the “Company”, “We” or “Our”) was incorporated in the
Commonwealth of Pennsylvania in January 1992. The Company is a leading supplier
of cashless, remote management, reporting and energy management solutions
serving the unattended Point of Sale market. Our networked devices and
associated services enable the owners and operators of everyday, stand-alone,
distributed assets, such as vending machines, kiosks, personal computers,
photocopiers, and laundry equipment, the ability to remotely monitor, control
and report on the results of these distributed assets, as well as the ability to
offer their customers cashless payment options. As part of our Intelligent
Vending® solution, our Company also manufactures and sells energy management
products which reduce the electrical power consumption of equipment, such as
refrigerated vending machines and glass front coolers, thus reducing the
electrical energy costs associated with operating this equipment.
Interim
Financial Information
The
accompanying unaudited consolidated financial statements of USA Technologies,
Inc. have been prepared in accordance with U.S. generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements and therefore should be read in conjunction with the Company’s Annual
Report on Form 10-K for the year ended June 30, 2007. In the opinion of
management, all adjustments considered necessary for a fair presentation,
consisting of normal recurring adjustments, have been included. Operating
results for the nine-month period ended March 31, 2008 are not necessarily
indicative of the results that may be expected for the year ending June 30,
2008. The balance sheet at June 30, 2007 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by U.S. generally accepted accounting principles for
complete financial statements.
The
Company has incurred losses from its inception through June 30, 2007 and losses
have continued through March 2008 and are expected to continue during fiscal
year 2008. The Company's ability to meet its future obligations is dependent
upon the success of its products and services in the marketplace and the
available capital resources. Until the Company's products and services can
generate sufficient operating revenues, the Company will be required to use its
cash and cash equivalents on hand as discussed below, as well as raise capital
to meet its cash flow requirements including the issuance of Common Stock (Note
4) and the exercise of outstanding Common Stock warrants (Note
5).
USA
Technologies, Inc.
Notes to
Consolidated Financial Statements
|
1.
|
Accounting
Policies (Continued)
|
Consolidation
The
accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, Stitch Networks Corporation
("Stitch") and USAT Capital Corp LLC (“USAT Capital”). All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Use
of Estimates
The
preparation of the consolidated financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those
estimates.
Reclassification
Certain
amounts in the prior period financial statements have been reclassified to
conform to the current period presentation.
Cash
Equivalents
Cash
equivalents represent all highly liquid investments with original maturities of
three months or less. Cash equivalents are comprised of certificates of deposit
and a money market fund. The Company maintains its cash in bank deposit
accounts, which may exceed federally insured limits at times.
Available-For-Sale
Securities
The
Company accounts for investments in accordance with Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities". Management determines the appropriate classifications of
securities at the time of purchase and reevaluates such designation as of each
balance sheet date. Available-for-sale securities are carried at fair value,
with the unrealized gains and losses reported as a separate component of
shareholders' equity in accumulated other comprehensive income (loss). If the
investment sustains an other-than-temporary decline in fair value, the
investment is written down to its fair value by a charge to
earnings.
As of
March 31, 2008, available-for-sales securities consisted of $14,150,000 par
value of auction rate securities (“ARS”) that were purchased during January
2008. The Company’s ARS are long-term variable rate securities whose dividend
rates are reset every seven days through a “dutch auction” conducted by
investment banks. We have the option to participate in the auction and sell our
ARS to prospective buyers at par value. Our ARS are all AAA or Aaa rated, and
represent preferred stock of closed-end investment firms. Our ARS have no fixed
maturity dates.
USA
Technologies, Inc.
Notes to
Consolidated Financial Statements
|
1.
|
Accounting
Policies (Continued)
|
Until
February 2008, the auction process had allowed investors to obtain liquidity if
so desired by selling the securities at their par values on the weekly auction
date. However, beginning the week of February 11, 2008, the auctions for our ARS
failed as a result of negative overall market conditions, meaning there were not
enough buyers to purchase the amount of securities available for sale at
auction. The result of a failed auction, which does not signify a default by the
issuer, is that the ARS continue to pay dividends in accordance with their
terms, but we are not able to liquidate any of these securities until these
securities are redeemed by the issuer, or until there is a successful auction,
or until such time as other markets for these investments develop.
As of
March 31, 2008, we have classified $7,575,000 of our ARS as current assets as we
have received a notice of redemption at par value from the issuer subsequent to
March 31, 2008, and classified the remaining $6,575,000 of our ARS as
non-current assets. Although we have uncertainty with regard to the short-term
liquidity of these securities, we continue to believe that the par value
represents the fair value of these investments. We currently anticipate that we
will be able to realize the par value of our ARS either through redemption by
the issuer, successful auction, or through a buyer outside of the auction
process and believe that we have the ability to hold these securities for a
sufficient period of time for us to realize the par value of these securities.
As such, there was no unrealized loss recorded as of March 31, 2008 in
connection with our ARS investments.
Inventory
Inventory
consists of finished goods and packaging materials. The Company's inventory is
stated at the lower of cost (average cost basis) or market.
USA
Technologies, Inc.
Notes to
Consolidated Financial Statements
|
1.
|
Accounting
Policies (Continued)
|
Income
Taxes
No
provision for income taxes has been made in the nine months ended March 31, 2008
and 2007 given the Company’s losses in 2008 and 2007 and available net operating
loss carryforwards. A benefit has not been recorded as the
realization of the net operating losses is not assured and the timing in which
the Company can utilize its net operating loss carryforwards in any year or in
total may be limited by provisions of the Internal Revenue Code regarding
changes in ownership of corporations.
In
July 2006, the Financial Accounting Standards Board issued FASB
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an
interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in an entity’s financial
statements in accordance with FASB Statement No. 109, “Accounting for
Income Taxes”. FIN 48 prescribes a recognition threshold and measurement
attribute for financial statement disclosure of tax positions taken or expected
to be taken on a tax return. Additionally, FIN 48 provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. The Company adopted FIN 48 effective
July 1, 2007 and there was no material affect on our results of operations
or financial position.
Loss
Per Common Share
Basic
earnings per share is calculated by dividing income (loss) applicable to common
shares by the weighted average common shares outstanding for the period. Diluted
earnings per share is calculated by dividing income (loss) applicable to common
shares by the weighted average common shares outstanding for the period plus the
dilutive effect (unless such effect is anti-dilutive) of potential common
shares. No exercise of stock options, purchase rights, stock purchase warrants,
or the conversion of senior notes, debentures, preferred stock, or cumulative
preferred dividends was assumed during the periods presented because the assumed
exercise of these securities would be anti-dilutive.
Shared-Based
Payment
The
Company applies FAS123(R) “Share-Based Payment” which requires the measurement
of the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award. There were no
common stock options granted during the nine months ended March 31, 2008. The
Company recorded stock compensation expense of $35,963 and $138,704 related to
Common Stock grants and the vesting of shares previously granted to employees
under the 2007-A Stock Compensation Plan and $5,466 and $66,020 related to the
vesting of Common Stock options during the three and nine months ended March 31,
2008, respectively. The Company recorded a reduction to stock compensation
expense of $94,174 and recorded stock compensation expense of $428,925 related
to the vesting of shares under the Long-term Equity Incentive Program during the
three and nine months ended March 31, 2008.
USA
Technologies, Inc.
Notes to
Consolidated Financial Statements
|
2.
|
Accrued
Expenses
|
Accrued
expenses consist of the following:
|
March 31
|
June 30
|
|||||||
|
2008
|
2007
|
|||||||
|
(unaudited)
|
||||||||
|
Accrued
compensation and related sales commissions
|
$ | 619,834 | $ | 502,431 | ||||
|
Advanced
customer billings
|
433,447 | 96,264 | ||||||
|
Accrued
share-based payment liability
|
428,925 | - | ||||||
|
Accrued
taxes and filing fees
|
377,494 | 202,428 | ||||||
|
Accrued
professional fees
|
235,926 | 213,086 | ||||||
|
Accrued
other
|
170,604 | 402,869 | ||||||
|
Accrued
interest
|
- | 14,574 | ||||||
| $ | 2,266,230 | $ | 1,431,652 | |||||
|
3.
|
Senior
Notes and Long-Term Debt
|
As of
March 31, 2008 there were no outstanding Senior Notes as all of the remaining
Senior Note balances were repaid during the fiscal year ended June 30, 2007. As
of March 31, 2007, the outstanding balance of Senior Notes was
$2,509,945. Debt discount and other issuance costs associated with
the Senior Notes were amortized to interest expense over the life of the Senior
Notes. Total charges to interest for amortization of debt discount and other
issuance costs were $338,996 and $1,096,317 for the three and nine months ended
March 31, 2007, respectively.
Long-term
debt consists of the following:
|
March
31
|
June
30
|
|||||||
|
2008
|
2007
|
|||||||
|
(unaudited)
|
||||||||
|
Capital
lease obligations
|
$ | 624,758 | $ | 677,475 | ||||
|
Loan
agreements for working capital
|
447,491 | 318,224 | ||||||
|
Loan
agreements for fixed assets and insurance premiums
|
106,551 | 34,046 | ||||||
| 1,178,800 | 1,029,745 | |||||||
|
Less
current portion
|
656,454 | 514,302 | ||||||
| $ | 522,346 | $ | 515,443 | |||||
During
July 2007, the Company entered into a loan agreement for $150,355 with a
financial institution bearing interest at 12% that was collaterized by $169,420
of the Finance Receivables. The Company agreed to make 32 monthly payments of
$5,826, which include interest and principal, from the proceeds received from
the Finance Receivables. During July 2007, the Company also entered into a loan
agreement for $89,385 with the same financial institution bearing interest at
12% that was collaterized by $105,074 of the Finance Receivables. The Company
agreed to make 32 monthly payments of $3,278, which include interest and
principal, from the proceeds received from the Finance
Receivables.
USA
Technologies, Inc.
Notes to
Consolidated Financial Statements
|
3.
|
Senior
Notes and Long-Term Debt
(Continued)
|
As of
March 31, 2008, $241,053 and $225,505 of the current and long-term Finance
Receivables, respectively, are collateral for the outstanding balances of loans,
of which $256,188 and $101,646 is classified as current and long-term debt,
respectively.
During
November 2007, the Company entered into a long-term debt agreement for $93,000
with a financial institution bearing interest at 8.25% that was collaterized by
the assets of the Company. The Company agreed to make 84 monthly payments of
$1,467, including interest and principal.
During
August and December 2007, the Company financed the premiums for various
insurance policies totaling $203,777, due in 10 monthly installments at an
interest rate of 8%.
|
4.
|
Common
Stock
|
On
October 17, 2007, the Company entered into a securities purchase agreement
(collectively, the “Securities Purchase Agreement”) with 37 accredited investors
(“Buyers”). Pursuant to the Securities Purchase Agreement, the Company sold to
the Buyers a total of 2,142,871 shares of the Company’s Common Stock (“Shares”)
at a price of $7.00 per Share, for gross proceeds of $15,000,097. William Blair
& Co., LLC (“Blair”), a broker-dealer registered under the 1934 Act, acted
as the exclusive placement agent for the private placement. As compensation for
its services, the Company paid Blair a fee equal to approximately eight percent
of the total consideration received by the Company as a result of the offering.
The fee was comprised of cash of $945,000 and warrants to purchase up to 17,532
shares of the Company’s Common Stock at $7.70 per share at any time through
October 17, 2012. Pursuant to the Registration Rights Agreement entered into
between the Company and each Buyer, the Company registered the Buyers shares
with the Securities and Exchange Commission (“SEC”) covering the resale of the
Shares effective December 20, 2007.
USA
Technologies, Inc.
Notes to
Consolidated Financial Statements
|
4.
|
Common
Stock (Continued)
|
On
September 25, 2006, the Company entered into a Common Stock Purchase Agreement
(the “2006-B Common Stock Agreement”) with Steve Illes. Mr. Illes agreed to
purchase shares of the Company's Common Stock with an aggregate purchase price
not to exceed $15,000,000. Under the 2006-B Common Stock Agreement, the Company
has the right at any time to require Mr. Illes to purchase Common Stock from the
Company at the lower of: (i) $30.00 per share; or (ii) 90% of the closing bid
price per share on the date prior to the date of the delivery by the Company to
Mr. Illes of notice of his obligation to purchase. The Company can require Mr.
Illes to purchase shares only if the shares have been registered by the Company
for resale by Mr. Illes under the Securities Act of 1933, as amended (the
“Act”). On October 20, 2006 and July 9, 2007 the Company filed a registration
statement under the 1933 Act that included 1,000,000 and 800,000 shares of
Common Stock, respectively. During any calendar month, Mr. Illes cannot be
required by the Company to purchase Common Stock for an aggregate purchase price
in excess of $800,000. The 2006-B Common Stock Agreement terminates August 30,
2009. During the nine months ended March 31, 2008, the Company issued shares of
Common Stock under the 2006-B Common Stock Agreement for total gross proceeds of
$5,671,847, net of issuance costs of $1,410. As of March 31, 2008, the Company
issued $15,000,000 in Common Stock and there are no remaining funds under this
agreement.
On
February 12, 2007, the Company adopted the Long-Term Equity Incentive Program
(the “Plan”) for each of George R. Jensen, Jr., Stephen P. Herbert, and David M.
DeMedio. Based upon the financial results of the Company for the fiscal year
ended June 30, 2007, the target goal (100%) relating to revenues was met and the
minimum target goals relating to gross profit and EBITDA were not met. EBITDA is
defined as earnings before interest, taxes, depreciation, and amortization, and
excludes non-cash stock payments/awards and stock options granted to officers
and Board members. Substantially all of the e-Port units sold during fiscal year
2007 consisted of units pertaining to the MasterCard PayPass seeding program
with substantially reduced selling prices which resulted in reduced gross profit
and EBITDA. Management’s goal was to have the maximum number of units deployed
in the field as quickly as possible. The Compensation Committee agreed with
management that given the current stage of the Company’s business, it was more
beneficial to the Company to maximize the number of e-Ports in the field as soon
as possible.
As a
result, on September 21, 2007, the Compensation Committee recommended to the
Board of Directors that the selling price of all the e-Ports sold during the
fiscal year be “normalized” to the current retail price. This normalization
resulted in increased proforma revenues, gross profit and EBITDA for the e-Port
units sold in the MasterCard PayPass seeding program. The Compensation Committee
also recommended that the executive officers be given the option to elect to
satisfy certain minimum statutory tax withholding obligations for the restricted
stock bonuses previously awarded and issued to the executives under their
employment agreements by reducing the number of Common Shares otherwise issuable
to them under the Plan. The Board of Directors approved the recommendations of
the Compensation Committee.
USA
Technologies, Inc.
Notes to
Consolidated Financial Statements
|
4.
|
Common
Stock (Continued)
|
As a
result of the normalization, certain target hurdles were met resulting in the
vesting of a total of 241,249 shares under the Plan for the fiscal year rather
than a total of 101,578 shares prior to the normalization. The value of the
number of the shares the executives may apply to tax withholding was in excess
of the minimum statutory obligation and, as a result the Plan is classified as a
liability award rather than an equity award. As such, the Company reclassified
the $599,311 related to the 101,578 shares that was previously recorded in
Common Stock to a short-term share-based payment liability. As the price of the
Company’s shares was $8.45 on the date of the approval of the normalization, a
charge of $1,180,220 was also recorded to compensation expense, related to the
additional 139,671 additional shares, with a corresponding amount to the
short-term share-based payment liability for a total share-based payment
liability of $1,779,531 as of September 21, 2007. On September 28, 2007, as the
Company’s share price was $8.38, the total share-based payment liability related
to fiscal year 2007 was $1,769,754 ($599,311 compensation expense in fiscal year
2007 and $1,170,443 in the three months ended September 30, 2007). Of the
241,249 shares vested for fiscal year 2007, the Company issued 225,249 shares of
Common Stock and the remaining 16,000 shares were exchanged by the executives
and redeemed by the Company to settle tax withholding obligations paid by the
Company totaling $134,080 in connection with the restricted stock bonuses
previously awarded and issued to them under their employment agreements. As a
result of the fact that a portion of the remaining 225,249 shares were subject
to redemption at September 30, 2007, the Company had recorded the entire fair
value of those remaining shares as a short-term share-based payment liability as
of September 30, 2007 totaling $1,635,674. On December 30, 2007 the redemption
provision lapsed, no further shares were redeemed and the final settlement
resulted in a reduction of the short-term share-based payment liability of
$1,635,674, a reduction of compensation expense of $446,452 and a credit to
Common Stock of $1,189,222 (123,671 shares at $4.77 and 101,578 shares at
$5.90), as the share price on the date of settlement was $4.77.
In
conjunction with the Plan award for fiscal year 2008, the Company recorded a
reduction to compensation expense of $94,174 and recorded compensation expense
of $428,925 and a corresponding amount to the short-term accrued shared-based
payment liability during the three and nine months ended March 31, 2008. This
amount was based on management’s estimate of the probability of meeting the
target goals and fair value of the Company’s stock of $4.50 at the end of the
reporting period, March 31, 2008. Management will update this estimate and
remeasure the short-term share-based payment liability at the end of each
reporting period until settlement. The final measurement and charge to
compensation expense will be determined on the date of settlement.
|
5.
|
Common
Stock Warrants
|
During
the nine months ended March 31, 2008, the Company received $374,675 upon the
exercise of 58,543 Common Stock warrants at an exercise price of $6.40 per
share.
As of
March 31, 2008, there were 1,591,735 Common Stock warrants outstanding, all of
which were exercisable at exercise prices ranging from $6.40 to $20 per
share.
USA
Technologies, Inc.
Notes to
Consolidated Financial Statements
|
6.
|
Commitments
and Contingencies
|
Various
legal actions and claims occurring in the normal course of business are pending
or may be instituted or asserted in the future against the Company. The Company
does not believe that the resolution of these matters will have a material
effect on the financial position or results of operations of the
Company.
In
September 2007 and provided that the manufacturer can produce a lower cost
e-Port for the Company, the Company had committed to purchase approximately
$3,600,000 of inventory from a third party contract manufacturer over an
eighteen month period.
|
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of Operations
|
Forward Looking
Statements
This Form
10-Q contains certain forward looking statements regarding, among other things,
the anticipated financial and operating results of the Company. For this
purpose, forward looking statements are any statements contained herein that are
not statements of historical fact and include, but are not limited to, those
preceded by or that include the words, “believes,” “expects,” “anticipates,” or
similar expressions. Those statements are subject to known and unknown risks,
uncertainties and other factors that could cause the actual results to differ
materially from those contemplated by the statements. The forward looking
information is based on various factors and was derived using numerous
assumptions. Important factors that could cause the Company’s actual results to
differ materially from those projected, include, for example (i) the ability of
the Company to generate sufficient sales to generate operating profits, or to
sell products at a profit, (ii) the ability of the Company to raise funds in the
future through sales of securities, (iii) whether the Company is able to enter
into binding agreements with third parties to assist in product or network
development, (iv) the ability of the Company to commercialize its developmental
products, or if actually commercialized, to obtain commercial acceptance
thereof, (v) the ability of the Company to compete with its competitors to
obtain market share, (vi) the ability of the Company to obtain sufficient funds
through operations or otherwise to repay its debt obligations or to fund
development and marketing of its products, (vii) the ability of the Company to
obtain approval of its pending patent applications or the risk that its
technologies would infringe patents owned by others, (viii) the ability of the
Company to satisfy its trade obligations included in accounts payable and
accrued liabilities, (ix) the ability of the Company to predict or estimate its
future quarterly or annual revenues given the developing and unpredictable
market for its products and the lack of established revenues, (x) the ability of
the Company to retain key customers as a significant portion of its revenues is
derived from a limited number of key customers, (xi) the ability of a key
customer to reduce or delay purchasing products from the Company, and (xii) the
risk that the Company may have to take an impairment charge relating to its ARS
investments in the future, or may have to sell its ARS investments below par
value in the future. Although the Company believes that the forward looking
statements contained herein are reasonable, it can give no assurance that the
Company’s expectations will be met.
Results
of Operations
Three
months ended March 31, 2008
Revenues
for the three months ended March 31, 2008 were $4,263,512 to $2,690,414 for the
corresponding three-month period in the previous fiscal year. This $1,573,098 or
58% increase was due to an increase in equipment sales of $940,945 and an
increase in license and transaction fees of $632,153. The increase in equipment
sales was due to an increase in sales of approximately $542,000 in e-Port
vending equipment sales, primarily related to the November 2007 agreement with
MasterCard Worldwide to deploy an additional 4,000 e-Ports, an increase in sales
of approximately $325,000 in energy conservation equipment, and a slight
increase in other equipment sales of approximately $74,000. The increase in
license and transaction fees was due to the increase in the number of e-Port
units on our USALive® network, primarily as a result of the November 2007
MasterCard agreement and the recurring revenues being generated by the e-Ports
deployed in the prior two quarters under the MasterCard PayPass Participation
Agreement entered into by the Company, Coca-Cola Enterprises and MasterCard
Worldwide (the “CCE/MasterCard Agreement”).
In
regards to license fees, as of March 31, 2008, the Company had approximately
31,000 devices connected to our USALive® network as compared to approximately
14,000 devices as of March 31, 2007.
In
regards to transaction fees, during the quarter ended March 31, 2008, the
Company processed approximately 3.2 million transactions totaling over $9.0
million as compared to approximately 1.0 million transactions totaling over $5.5
million during the quarter ended March 31, 2007, an increase of 220% in
transaction volume and 64% in dollars processed.
Cost of
sales for the period consisted of equipment costs of $2,563,596 and network and
transaction services related costs of $804,194. The increase in total cost of
sales of $995,316 or 42% over the same period in the prior year was due to an
increase in equipment costs of $541,437 and network and transaction services
related costs of $453,879.
Gross
profit for the three months ended March 31, 2008 was $895,722, compared to a
gross profit of $317,940 for the corresponding three-month period in the
previous fiscal year. This $577,782 or 182% increase is primarily due to an
increase in the profit margins of both the energy equipment sales as well as the
e-Port vending equipment sales as a result of producing the products at a lower
cost primarily due to offshore production, as well as selling both of the
products at higher average sales prices.
Selling,
general and administrative expense of $4,392,292 increased by $791,748 or 22%
primarily due to an increase in professional and consulting services of
approximately $289,000, an increase of approximately $130,000 in facilities
expense, an increase in recruiting fees of approximately $103,000, a net
increase in compensation expense of approximately $66,000, an increase of
approximately $65,000 in sales commissions and an increase in other operating
expenses of approximately $138,000.
Compensation
expense increased by approximately $66,000 due primarily to an increase in
salaries and benefits expense of approximately $286,000, offset by a decrease of
approximately $219,000 in non-cash charges related to the vesting of shares
under the Long-Term Equity Incentive Program for fiscal year 2008 as compared to
2007. The increase in salaries and benefits expense relates to an increase in
the number of employees as of March 31, 2008 as compared to the prior
year.
Interest
expense of $38,450 decreased by $475,834 or 93% primarily due to retirement of
the outstanding convertible Senior Notes that were repaid in April 2007.
Interest income increased by $158,861 due to the investment of proceeds received
from private placements.
The
quarter ended March 31, 2008 resulted in a net loss of $3,760,546 (approximately
$0.4 million of non-cash charges) compared to a net loss of $4,119,458
(approximately $1.2 million of non-cash charges) for the quarter ended March 31,
2007.
During
March 2008, the Company introduced its new generation seven (G7) e-Port product
at the NAMA Spring Expo, the vending industry’s trade show. The
Company has already received orders for 6,200 e-Port G7 cashless terminals
representing revenues to the Company of approximately $2,740,000. Of these
recent orders, sales of 1,200 e-Port G7 units (representing approximately
$540,000 of revenues) are included in the operating results for the three months
ended March 31, 2008, and sales of the remaining 5,000 e-Port G7 units (or
approximately $2,200,000 of revenues) are anticipated to be included in the
operating results for the three months ended June 30, 2008. The foregoing does
not reflect any monthly network service fees or transaction processing fees to
be received by the Company in connection with these e-Port G7 cashless
terminals.
Nine
months ended March 31, 2008
Revenues
for the nine months ended March 31, 2008 were $11,078,571 compared to $6,711,033
for the corresponding nine-month period in the previous fiscal year. This
$4,367,538 or 65% increase was primarily due to an increase in equipment sales
of $2,897,149 and license and transaction fees of $1,470,389. The increase in
equipment sales was due to an increase in sales of approximately $2,391,000 of
e-Port vending equipment sales and approximately $649,000 in energy conservation
equipment, offset by decreases of approximately $101,000 in business center
sales and approximately $41,000 in other equipment sales. The increase in e-Port
vending equipment sales was primarily related to the CCE/MasterCard Agreement
and the November 2007 MasterCard Worldwide agreement. The increase in license
and transaction fees was due to the increase in the number of e-Port units on
our USALive® network, primarily as a result of the November 2007 MasterCard
agreement and the recurring revenues being generated by the e-Ports deployed in
the prior two quarters under the CCE/MasterCard Agreement.
Cost of
sales for the period consisted of equipment costs of $6,592,088 and network and
transaction services related costs of $2,028,675. The increase in cost of sales
of $3,127,395 or 57% over the prior year period was due to an increase in
equipment costs of approximately $1,981,992 and an increase of approximately
$1,145,403 of network and transaction related costs.
Gross
profit for the nine months ended March 31, 2008 was $2,457,808 compared to gross
profit of $1,217,665 for the corresponding nine-month period in the previous
fiscal year.
This 102% increase is primarily due to an increase in the profit margins
of both the energy equipment sales as well as the e-Port vending equipment sales
as a result of producing the products at a lower cost primarily due to offshore
production, as well as selling both of the products at higher average sales
prices.
Selling,
general and administrative expense of $14,226,973, increased by $3,820,198 or
37% primarily due to an increase in compensation expense of approximately
$2,348,000, an increase in professional and consulting services of approximately
$607,000, an increase in recruiting fees of approximately $388,000, and an
increase of approximately $189,000 in facilities expense, and an increase in bad
debt expense of approximately $92,000.
Compensation
expense increased by approximately $2,348,000 due primarily to an increase in
salaries and benefits expense of approximately $1,320,000 and an increase of
approximately $1,028,000 in non-cash charges related to the vesting of shares
under the Long-Term Equity Incentive Program for fiscal year 2008 as compared to
2007.
Interest
expense of $112,388 decreased by $1,755,408 primarily due to retirement of the
outstanding convertible Senior Notes that were repaid in April 2007. Interest
income increased by $581,303 due to the investment in available-for-sale
securities with proceeds received from private placements.
The
nine-month period ended March 31, 2008 resulted in a net loss of $12,663,201
(approximately $2.9 million of non-cash charges) compared to a net loss of
$12,176,860 (approximately $3.9 million of non-cash charges) for the nine-month
period ended March 31, 2007.
During
fiscal year 2008, the Company intends to continue to attempt to improve its
business model and financial results. In this regard, we will continue our
e-Port rental program. Management believes that this rental business
model will accelerate the adoption of its e-Port technology among operators that
do not want to initially purchase the e-Port technology outright. During the
first quarter of the 2008 fiscal year, the Company entered into a contract with
a manufacturer under which the manufacturer would attempt to produce for us a
lower cost e-Port device. If successful, we have committed to purchase at least
$3,600,000 of the new e-Port device from this manufacturer over an eighteen
month period. Finally, due to the fact that the Company, as a merchant, has
recently received competitive offers from various credit card processors, the
Company has discontinued considering the possibility of becoming a credit card
processor at this time.
Liquidity
and Capital Resources
For the
nine months ended March 31, 2008, net cash of $9,774,372 was used by operating
activities, primarily due to the net loss of $12,663,201 offset by non-cash
charges totaling $2,858,540 for transactions involving the vesting and issuance
of common stock to employees, the vesting of stock options, bad debt expense and
the depreciation and amortization of assets. In addition to these non-cash
charges, the Company’s net operating assets increased by $185,689 primarily due
to an increase in inventories and decrease in accrued expenses, partially offset
by an increase in accounts payable and slight decreases in accounts and finance
receivables and prepaid expenses.
Proceeds
from financing activities for the nine months ended March 31, 2008 provided
$19,753,369 of funds, which were necessary to support cash used in operating
activities. Net proceeds of $20,028,422 were realized from the issuance of
Common Stock and exercise of Common Stock warrants, offset by the net repayment
of $275,053 of long-term debt.
The
Company has incurred losses since inception. Cumulative losses through March 31,
2008 amounted to approximately $158,000,000. The Company has continued to raise
capital through equity offerings to fund operations.
As of
March 31, 2008 the Company had $6,814,731 of cash and cash equivalents on hand
and $14,150,000 of available-for-sale securities, of which $7,575,000 and
$6,575,000 are classified as current and non-current, respectively (see Note 1
to the Consolidated Financial Statements). The ARS classified as non-current are
all rated AAA or Aaa. As set forth above, the auctions for these securities
failed in mid-February 2008, and the funds represented by the ARS will not be
accessible until the issuer calls the security, a successful auction occurs, or
a buyer is found outside of the auction process. Based on our expected operating
cash flows and our other sources of cash, we do not believe that the uncertainty
regarding the liquidity of our ARS will have a material impact on our overall
ability to meet our liquidity needs for the next twelve months.
In order
to attempt to improve our operating results and accelerate profitability, we
took appropriate actions during the fiscal quarter to reduce our cash-based
selling, general and administrative expenses by approximately $4,600,000 on an
annualized basis. These actions consisted of staff reductions and
related costs of approximately $2.6 million and reductions in our controllable
costs of approximately $2.0 million. The Company anticipates that the effect of
these cost reductions will begin to be reflected in the fourth quarter of this
fiscal year with the full benefit of the cost reductions reflected in the 2009
fiscal year. We also believe that these cost reductions will not materially
adversely affect our planned revenue growth for the foreseeable
future.
During
the first nine months of the fiscal year, the Company’s monthly cash
requirement, including requirements for capital expenditures and repayment of
long-term debt, were approximately $1,200,000 per month. Assuming that the
Company’s monthly cash requirement for each of the next fifteen months was
$1,200,000, or an aggregate of $18,000,000, and assuming further that the cash
cost reductions described above of $4,600,000 per annum ($5,750,000 for the
fifteen months) are fully realized during the next fifteen months, the Company’s
cash requirements, including capital expenditures and repayment of long-term
debt, during the next fifteen months would be approximately
$12,250,000.
Funding
sources in place to meet the Company's cash requirements are primarily comprised
of approximately $6,800,000 of cash and cash equivalents on hand as of March 31,
2008 and $7,575,000 of current available-for-sale securities. Based upon the
assumptions described above, the Company believes these existing sources will
provide sufficient funds to meet its cash requirements, including capital
expenditures and repayment of long-term debt, through at least June 30,
2009.
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market
Risk
|
The
Company’s exposure to market risks for interest rate changes is not significant.
Interest rates on its long-term debt are generally fixed and its investments in
cash equivalents and other securities are not significant. Market risks related
to fluctuations of foreign currencies are not significant and the Company has no
derivative financial instruments.
|
Item
4T.
|
Controls
and Procedures
|
|
(a)
|
Evaluation
of disclosure controls and
procedures.
|
The
principal executive officer and principal financial officer have evaluated the
Company’s disclosure controls and procedures as of March 31,
2008. Based on this evaluation, they conclude that the disclosure
controls and procedures were effective to ensure that the information required
to be disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules and forms
and to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Securities Exchange Act of 1934 is
accumulated and communicated to the Company’s management, including its
principal executive and principal financial officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.
|
(b)
|
Changes
in internal controls.
|
There
have been no changes during the quarter ended March 31, 2008 in the Company’s
internal controls over financial reporting that have materially affected, or are
reasonably likely to materially affect, internal control over financial
reporting.
Part II - Other Information
|
Item
2.
|
Unregistered Sales of Equity Securities and Use of
Proceeds
|
During
the quarter ended March 31, 2008, the Company issued to Steve Illes 217,163
shares for an aggregate purchase price of $958,457 pursuant to the 2006-B Common
Stock Purchase Agreement. The offer and sale of the shares were exempt from
registration under Rule 506 promulgated under Section 4(2) of the Act. Mr. Illes
is an accredited investor, made appropriate investment representations, was
afforded access to all public filings and all other information that the Company
could reasonably obtain. As agreed between Mr. Illes and the Company, the shares
issued to Mr. Illes were registered for resale by Mr. Illes under the 1933
Act.
|
Item3.
|
Defaults Upon Senior
Securities
|
There
were no defaults on any senior securities. However, on February 1, 2008, an
additional $390,294 of dividends were accrued on our cumulative Series A
Convertible Preferred Stock. The total accrued and unpaid dividends on our
Series A Convertible Preferred Stock as of April 25, 2008 are $9,773,300. The
dividend accrual dates for our Preferred Stock are February 1 and August
1. The annual cumulative dividend on our Preferred Stock is $1.50 per
share.
|
Item
4.
|
Submission of Matters to a Vote of Security
Holders
|
|
(a)
|
The
Company's Annual Meeting of Shareholders was held on February 28,
2008.
|
|
(b)
|
The
result of the voting in the election of directors was as
follows:
|
|
Director
Nominees
|
For
|
Withheld
|
||||
|
George
R. Jensen, Jr.
|
10,476,011
|
1,371,667
|
||||
|
Stephen
P. Herbert
|
10,488,079
|
1,362,599
|
||||
|
William
L. Van Alen, Jr.
|
11,418,682
|
431,996
|
||||
|
Steven
Katz
|
10,789,283
|
1,061,395
|
||||
|
Douglas
M. Lurio
|
10,503,332
|
1,347,346
|
||||
|
Stephen
W. McHugh
|
11,416,061
|
434,617
|
||||
|
Joel
Brooks
|
11,415,653
|
435,025
|
|
|
(c)
|
In
addition to the election of directors, the following other matters were
also voted on and approved at the Annual
Meeting:
|
The
shareholders ratified the appointment of McGladrey & Pullen, LLP as the
independent registered public accounting firm of the Company for fiscal year
2008 by a vote of 11,674,006 for, 88,953 against and 87,719
abstained.
The
shareholders approved the USA Technologies, Inc. 2008 Stock Incentive Plan by a
vote of 3,728,075 for, 1,880,264 against, 39,858 abstained. There were 6,202,481
broker non-votes. Under Pennsylvania law, the broker non-votes do not affect the
voting on the proposal (i.e., are not considered as votes cast).
The
shareholders approved an amendment to the Articles of Incorporation of the
Company to allow the Company to purchase its shares of Common Stock. Under
Pennsylvania law, the proposal required the approval of at least a majority of
the votes actually cast by each of the Common Stock and the Preferred Stock
voting separately as a class. The Common Stock approved the proposal as follows:
for- 5,030,623 shares; against- 64,290 shares; and abstain -18,294 shares. The
Preferred Stock approved the proposal as follows: for - 143,880 shares; against-
30,380 shares; and abstain - 2,150 shares. There were also broker non-votes
representing 6,404,349 shares of Common Stock and 112,641 shares of Preferred
Stock. Under Pennsylvania law, these broker non-votes do not affect the voting
on the proposal (i.e., are not considered as votes cast).
|
Item
6.
|
|
Certifications
of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934.
|
|
Certifications
of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934.
|
|
Certifications
by the Chief Executive Officer and Chief Financial Officer pursuant to 18
USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
| USA TECHNOLOGIES, INC. | |
|
Date: May
6, 2008
|
/s/ George R. Jensen,
Jr.
|
|
George
R. Jensen, Jr., Chairman and
|
|
|
Chief
Executive Officer
|
|
|
Date: May
6, 2008
|
/s/ David M.
DeMedio
|
|
David
M. DeMedio,
|
|
|
Chief
Financial Officer
|
Exhibit
31.1
CERTIFICATIONS
I, George
R. Jensen, Jr., Chief Executive Officer of the registrant, certify
that:
1. I have
reviewed this quarterly report on Form 10-Q of USA Technologies,
Inc.;
2. Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4. The
registrant's other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the registrant and have:
a. Designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
b. Evaluated
the effectiveness of the registrant's disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based upon such evaluation; and
c. Disclosed
in this report any change in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal quarter that
has materially affected or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The
registrant's other certifying officer and I have disclosed, based on our most
recent evaluation, of internal control over financial reporting to the
registrant’s auditors and the audit committee of the registrant's board of
directors:
a. all
significant deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and
report financial information; and
b. any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal control over financial
reporting.
|
Date:
May 6, 2008
|
/s/ George R. Jensen,
Jr.
|
|
George
R. Jensen, Jr.,
|
|
|
Chief
Executive Officer
|
Exhibit
31.2
CERTIFICATIONS
I, David
M. DeMedio, Chief Financial Officer of the registrant, certify
that:
1. I have
reviewed this quarterly report on Form 10-Q of USA Technologies,
Inc.;
2. Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4. The
registrant's other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the registrant and have:
a. Designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
b. Evaluated
the effectiveness of the registrant's disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based upon such evaluation; and
c. Disclosed
in this report any change in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal quarter that
has materially affected or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The
registrant's other certifying officer and I have disclosed, based on our most
recent evaluation, of internal control over financial reporting to the
registrant’s auditors and the audit committee of the registrant's board of
directors:
a. all
significant deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and
report financial information; and
b. any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal control over financial
reporting.
|
Date:
May 6, 2008
|
/s/ David M.
DeMedio
|
|
David
M. DeMedio,
|
|
|
Chief
Financial Officer
|
Exhibit
32
CERTIFICATION
PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of USA Technologies, Inc., (the "Company")
on Form 10-Q for the period ended March 31, 2008 (the "Report"), I, George R.
Jensen, Jr., Chief Executive Officer of the Company, hereby certify pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to
my knowledge:
(1) The
Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2) The
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company.
/s/ George R. Jensen,
Jr.
George R.
Jensen, Jr.
Chief
Executive Officer
CERTIFICATION
PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of USA Technologies, Inc., (the "Company")
on Form 10-Q for the period ended March 31, 2008 (the "Report"), I, David M.
DeMedio, Chief Financial Officer of the Company, hereby certify pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to
my knowledge:
(1) The
Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2) The
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company.
/s/ David M.
DeMedio
David M.
DeMedio
Chief
Financial Officer