SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 9, 2017
USA TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
|
Pennsylvania
|
001-33365
|
23‑2679963
|
|
(State or other jurisdiction of incorporation or organization)
|
(Commission File Number)
|
(I.R.S. Employer Identification No.)
|
100 Deerfield Lane, Suite 300
Malvern, Pennsylvania 19355
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: 610-989-0340
n/a
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
| ☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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| Item 2.02. |
Results of Operations and Financial Condition
|
On May 9, 2017, USA Technologies, Inc. (the “Company”), issued a press release reporting financial results for the third quarter of its fiscal year ended March 31, 2017, a copy of which is attached hereto as Exhibit 99.1, and is incorporated herein by reference.
| Item 9.01. |
Financial Statements and Exhibits
|
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Exhibit 99.1
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Press Release of the Company dated May 9, 2017
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SIGNATURES
Pursuant to the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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USA TECHNOLOGIES, INC.
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||
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Dated: May 9, 2017
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By:
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/s/ Stephen P. Herbert
|
|
Stephen P. Herbert,
|
||
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Chairman and Chief Executive Officer
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||
Index to Exhibits
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Exhibit No.
|
Description of Exhibit
|
|
Press Release of the Company dated May 9, 2017
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Exhibit 99.1
USA Technologies Announces Third Quarter Fiscal Year 2017 Results
Achieved $100 Million Revenue Run-Rate, and 500,000 Connection Goals
MALVERN, Pa. – May 9, 2017 – USA Technologies, Inc. (NASDAQ:USAT) (“USAT”), a premier payment technology service provider of integrated cashless and mobile transactions in the self-service retail market, today reported results for its third quarter ended March 31, 2017.
Third Quarter Financial Highlights:
| ☐ |
Total quarterly record revenue of $26.5 million, a year-over-year increase of 30% marking the 30th consecutive quarter of growth
|
| ☐ |
504,000 connections to ePort service, representing a year-over-year increase of 26%
|
| ☐ |
Added 500 customers to achieve record 12,400 total customers compared to 10,750 as of a year ago, a year-over-year increase of 15%
|
| ☐ |
Quarterly record license and transaction fee revenue of $17.5 million, a year-over-year increase of 19%
|
| ☐ |
Operating income of $419,000
|
| ☐ |
Ended the quarter with $17.8 million in cash
|
| ☐ |
Quarterly GAAP net income of $136,000
|
| ☐ |
Quarterly Non-GAAP net income of $345,000
|
| ☐ |
Quarterly Adjusted EBITDA of $1.9 million
|
Third Quarter and YTD Financial Highlights, Connections & Transaction Data:
|
As of and for the three months
ended March 31,
|
||||||||||||||||
|
(Connections and $'s in thousands, transactions in millions, eps is not rounded)
|
2017
|
2016
|
Change
|
% Change
|
||||||||||||
|
Revenues:
|
||||||||||||||||
|
License and transaction fees
|
$
|
17,459
|
$
|
14,727
|
$
|
2,732
|
18.6
|
%
|
||||||||
|
Equipment sales
|
9,001
|
5,634
|
3,367
|
59.8
|
%
|
|||||||||||
|
Total revenues
|
$
|
26,460
|
$
|
20,361
|
$
|
6,099
|
30.0
|
%
|
||||||||
|
License and transaction fee margin
|
32.0
|
%
|
34.1
|
%
|
(2.1
|
%)
|
||||||||||
|
Equipment sales gross margin
|
11.6
|
%
|
11.5
|
%
|
0.1
|
%
|
||||||||||
|
Overall Gross Margin
|
25.0
|
%
|
27.9
|
%
|
(2.9
|
%)
|
||||||||||
|
Operating income/(loss)
|
$
|
419
|
$
|
(595
|
)
|
$
|
1,014
|
170.4
|
%
|
|||||||
|
Net income/(loss)
|
$
|
136
|
$
|
(5,420
|
)
|
$
|
5,556
|
102.5
|
%
|
|||||||
|
Net loss per common shares - basic and diluted
|
$
|
(0.00
|
)
|
$
|
(0.16
|
)
|
$
|
0.16
|
100.0
|
%
|
||||||
|
Net cash provided by (used in) operating activities
|
$
|
848
|
$
|
4,328
|
$
|
(3,480
|
)
|
(80.4
|
%)
|
|||||||
|
Net New Connections
|
35,000
|
32,000
|
3,000
|
9.4
|
%
|
|||||||||||
|
Total Connections (at period end)
|
504,000
|
401,000
|
103,000
|
25.7
|
%
|
|||||||||||
|
Total Number of Transactions (millions)
|
104.9
|
82.0
|
22.9
|
27.9
|
%
|
|||||||||||
|
Transaction Volume (millions)
|
$
|
202.5
|
$
|
151.0
|
$
|
51.5
|
34.1
|
%
|
||||||||
|
Adjusted EBITDA
|
$
|
1,862
|
$
|
1,347
|
$
|
515
|
38.2
|
%
|
||||||||
|
Non-GAAP net income
|
$
|
345
|
$
|
(87
|
)
|
$
|
432
|
496.6
|
%
|
|||||||
|
As of and for the nine months
ended March 31,
|
||||||||||||||||
|
(Connections and $'s in thousands, transactions in millions, eps is not rounded)
|
2017
|
2016
|
Change
|
% Change
|
||||||||||||
|
Revenues:
|
||||||||||||||||
|
License and transaction fees
|
$
|
50,463
|
$
|
41,326
|
$
|
9,137
|
22.1
|
%
|
||||||||
|
Equipment sales
|
19,341
|
14,138
|
5,203
|
36.8
|
%
|
|||||||||||
|
Total revenues
|
$
|
69,804
|
$
|
55,464
|
$
|
14,340
|
25.9
|
%
|
||||||||
|
License and transaction fee margin
|
31.6
|
%
|
33.5
|
%
|
(1.9
|
%)
|
||||||||||
|
Equipment sales gross margin
|
16.4
|
%
|
16.6
|
%
|
(0.2
|
%)
|
||||||||||
|
Overall Gross Margin
|
27.4
|
%
|
29.2
|
%
|
(1.8
|
%)
|
||||||||||
|
Operating (loss)/income
|
$
|
(297
|
)
|
$
|
111
|
$
|
(408
|
)
|
(367.6
|
%)
|
||||||
|
Net loss
|
$
|
(2,095
|
)
|
$
|
(5,934
|
)
|
$
|
3,839
|
64.7
|
%
|
||||||
|
Net loss per common shares - basic and diluted
|
$
|
(0.07
|
)
|
$
|
(0.18
|
)
|
$
|
0.11
|
61.1
|
%
|
||||||
|
Net cash provided by (used in) operating activities
|
$
|
(4,295
|
)
|
$
|
5,197
|
$
|
(9,492
|
)
|
(182.7
|
%)
|
||||||
|
Net New Connections
|
75,000
|
68,000
|
7,000
|
10.3
|
%
|
|||||||||||
|
Total Connections (at period end)
|
504,000
|
401,000
|
103,000
|
25.7
|
%
|
|||||||||||
|
Total Number of Transactions (millions)
|
300.2
|
227.2
|
73.0
|
32.1
|
%
|
|||||||||||
|
Transaction Volume (millions)
|
$
|
577.3
|
$
|
415.7
|
$
|
161.6
|
38.9
|
%
|
||||||||
|
Adjusted EBITDA
|
$
|
4,297
|
$
|
5,358
|
$
|
(1,061
|
)
|
(19.8
|
%)
|
|||||||
|
Non-GAAP net (loss) income
|
$
|
(369
|
)
|
$
|
660
|
$
|
(1,029
|
)
|
(155.9
|
%)
|
||||||
“USA Technologies has marked another record revenue quarter, while also achieving our 3 year revenue and connection goals. We continue to drive our payment and consumer engagement solutions into the rapidly evolving unattended retail market as we help our operator customers improve each location’s performance,” said Stephen P. Herbert, USA Technologies’ chairman and chief executive officer. “We are leveraging our flexible platform with third party offerings and our own ePort Interactive service to deepen the relationship with customers and provide even more value from each connection, while simultaneously expanding our distribution network.”
Fiscal 2017 Outlook
For full fiscal year 2017, management expects to add between 115,000 and 125,000 net new connections for the year, bringing total connections to our service to a range of 544,000 to 554,000 and expects total revenue to be between $95 million and $100 million. We also expect to have year-over-year increases of adjusted EBITDA and non-GAAP net income.
Webcast and Conference Call
Management will host a conference call and webcast the event beginning at 8:30 a.m. Eastern Time today, May 9, 2017.
To participate in the conference call, please dial (866) 393-1608 approximately 10 minutes prior to the call. International callers should dial (224) 357-2194. Please reference conference ID # 8462087.
A live webcast of the conference call will be available at http://usat.client.shareholder.com/events.cfm. Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software. A telephone replay of the conference call will be available from 11:30 a.m. Eastern Time on May 9, 2017 until 11:30 a.m. Eastern Time on May 12, 2017 and may be accessed by calling (855) 859-2056 (domestic dial-in) or (404) 537-3406 (international dial-in) and reference conference ID # 8462087. An archived replay of the conference call will also be available in the investor relations section of the company's website.
About USA Technologies
USA Technologies, Inc. is a premier payment technology service provider of integrated cashless and mobile transactions in the self-service retail market. The company also provides a broad line of cashless acceptance technologies including its NFC-ready ePort® G-series, ePort® Connect, ePort® Interactive, QuickConnect, an API Web service for developers, and MORE., a customizable loyalty program. USA Technologies has 77 United States and foreign patents in force; and has agreements with Verizon, Visa, Chase Paymentech and customers such as Compass, AMI Entertainment and others. For more information, please visit the website at www.usatech.com.
Forward-looking Statements:
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: All statements other than statements of historical fact included in this release, including without limitation the business strategy and the plans and objectives of USAT's management for future operations, are forward-looking statements. When used in this release, words such as "anticipate", "believe", "estimate", "expect", "intend", and similar expressions, as they relate to USAT or its management, identify forward looking statements. Such forward-looking statements are based on the beliefs of USAT's management, as well as assumptions made by and information currently available to USAT's management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, the ability of management to accurately predict or forecast future financial results, including earnings or taxable income of USAT, or increased revenues at a customer location; the incurrence by USAT of any unanticipated or unusual non-operational expenses which would require us to divert our cash resources from achieving our business plan; the ability of USAT to retain key customers from whom a significant portion of its revenues is derived; the ability of USAT to compete with its competitors to obtain market share; whether USAT's customers continue to utilize USAT's transaction processing and related services, as our customer agreements are generally cancelable by the customer on thirty to sixty days' notice; the ability of USAT to raise funds in the future through the sales of securities or debt financings in order to sustain its operations if an unexpected or unusual non-operational event would occur; the ability of USAT to use available data to predict future market conditions, consumer behavior and any level of cashless usage; the ability to prevent a security breach of our systems or services or third party services or systems utilized by us; whether any patents issued to USAT will provide USAT with any competitive advantages or adequate protection for its products, or would be challenged, invalidated or circumvented by others; the ability of USAT to operate without infringing or violating the intellectual property rights of others; the ability of the Company to sell to third party lenders all or a portion of our finance receivables; the ability of a sufficient number of our customers to utilize third party financing companies under our QuickStart program in order to improve our net cash used by operating activities; whether USAT’s remediation efforts in connection with the control deficiencies that resulted in a material weakness in USAT’s internal controls over financial reporting as of June 30, 2016 would be effective or successful; whether USAT experiences additional material weaknesses in its internal controls over financial reporting in future periods, and USAT is not able to accurately or timely report its financial condition or results of operations; and whether USAT's existing or anticipated customers purchase, rent or utilize ePort devices or our other products or services in the future at levels currently anticipated by USAT. Readers are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement made by us in this release speaks only as of the date of this release. Unless required by law, USAT does not undertake to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.
Financial Schedules:
| A. |
Statements of Operations for the 3 Months and 9 Months Ended March 31, 2017 and 2016
|
| B. |
Five Quarter Select Key Performance Indicators
|
| C. |
Comparative Balance Sheets as of March 31, 2017 and June 30, 2016
|
| D. |
Five Quarter Statements of Operations and Adjusted EBITDA
|
| E. |
Five Quarter and YTD Selling, General, & Administrative Expenses
|
| F. |
Five Quarter Condensed Balance Sheets
|
| G. |
Five Quarter Statements of Cash Flows
|
| H. |
Five Quarter Reconciliation of Net Income/(Loss) to Non-GAAP Net Income (Loss) and Net Income/(Loss) Per Common Share – Basic and Diluted to Non-GAAP Net Income/(Loss) Per Common Share – Basic and Diluted
|
|
(A)
|
Statement of Operations for the 3 Months and 9 Months Ended March 31, 2017 and 2016
|
|
For the three months ended March 31,
|
||||||||||||||||||||||||
|
($ in thousands, except shares and per share data)
|
2017
|
% of Sales
|
2016
|
% of Sales
|
Change
|
% Change
|
||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||||||
|
License and transaction fees
|
$
|
17,459
|
66.0
|
%
|
$
|
14,727
|
72.3
|
%
|
$
|
2,732
|
18.6
|
%
|
||||||||||||
|
Equipment sales
|
9,001
|
34.0
|
%
|
5,634
|
27.7
|
%
|
3,367
|
59.8
|
%
|
|||||||||||||||
|
Total revenues
|
26,460
|
100.0
|
%
|
20,361
|
100.0
|
%
|
6,099
|
30.0
|
%
|
|||||||||||||||
|
Costs of sales/revenues:
|
||||||||||||||||||||||||
|
Cost of services
|
11,876
|
68.0
|
%
|
9,703
|
65.9
|
%
|
2,173
|
22.4
|
%
|
|||||||||||||||
|
Cost of equipment
|
7,959
|
88.4
|
%
|
4,986
|
88.5
|
%
|
2,973
|
59.6
|
%
|
|||||||||||||||
|
Total costs of sales/revenues
|
19,835
|
75.0
|
%
|
14,689
|
72.1
|
%
|
5,146
|
35.0
|
%
|
|||||||||||||||
|
Gross profit
|
6,625
|
25.0
|
%
|
5,672
|
27.9
|
%
|
953
|
16.8
|
%
|
|||||||||||||||
|
Operating expenses:
|
||||||||||||||||||||||||
|
Selling, general and administrative
|
5,947
|
22.5
|
%
|
6,094
|
29.9
|
%
|
(147
|
)
|
(2.4
|
%)
|
||||||||||||||
|
Depreciation and amortization
|
259
|
1.0
|
%
|
173
|
0.8
|
%
|
86
|
49.7
|
%
|
|||||||||||||||
|
Total operating expenses
|
6,206
|
23.5
|
%
|
6,267
|
30.8
|
%
|
(61
|
)
|
(1.0
|
%)
|
||||||||||||||
|
Operating income (loss)
|
419
|
1.6
|
%
|
(595
|
)
|
(2.9
|
%)
|
1,014
|
(170.4
|
%)
|
||||||||||||||
|
Other income (expense):
|
||||||||||||||||||||||||
|
Interest income
|
114
|
0.4
|
%
|
67
|
0.3
|
%
|
47
|
70.1
|
%
|
|||||||||||||||
|
Interest expense
|
(188
|
)
|
(0.7
|
%)
|
(180
|
)
|
(0.9
|
%)
|
(8
|
)
|
(4.4
|
%)
|
||||||||||||
|
Change in fair value of warrant liabilities
|
—
|
0.0
|
%
|
(4,805
|
)
|
(23.6
|
%)
|
4,805
|
100.0
|
%
|
||||||||||||||
|
Total other expense, net
|
(74
|
)
|
(0.3
|
%)
|
(4,918
|
)
|
(24.2
|
%)
|
4,844
|
(98.5
|
%)
|
|||||||||||||
|
Income (loss) before income taxes
|
345
|
1.3
|
%
|
(5,513
|
)
|
(27.1
|
%)
|
5,858
|
106.3
|
%
|
||||||||||||||
|
(Provision) benefit for income taxes
|
(209
|
)
|
(0.8
|
%)
|
93
|
0.5
|
%
|
(302
|
)
|
323.8
|
%
|
|||||||||||||
|
Net income (loss)
|
136
|
0.5
|
%
|
(5,420
|
)
|
(26.6
|
%)
|
5,556
|
102.5
|
%
|
||||||||||||||
|
Cumulative preferred dividends
|
(334
|
)
|
(1.3
|
%)
|
(334
|
)
|
(1.6
|
%)
|
—
|
0.0
|
%
|
|||||||||||||
|
Net loss applicable to common shares
|
$
|
(198
|
)
|
(0.7
|
%)
|
$
|
(5,754
|
)
|
(28.3
|
%)
|
$
|
5,556
|
96.6
|
%
|
||||||||||
|
Net loss per common share - basic and diluted
|
$
|
(0.00
|
)
|
$
|
(0.16
|
)
|
$
|
0.16
|
100.0
|
%
|
||||||||||||||
|
Basic and diluted weighted average number of common shares outstanding
|
40,327,697
|
36,161,626
|
4,166,071
|
11.5
|
%
|
|||||||||||||||||||
|
For the nine months ended March 31,
|
||||||||||||||||||||||||
|
($ in thousands, except shares and per share data)
|
2017
|
% of Sales
|
2016
|
% of Sales
|
Change
|
% Change
|
||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||||||
|
License and transaction fees
|
$
|
50,463
|
72.3
|
%
|
$
|
41,326
|
74.5
|
%
|
$
|
9,137
|
22.1
|
%
|
||||||||||||
|
Equipment sales
|
19,341
|
27.7
|
%
|
14,138
|
25.5
|
%
|
5,203
|
36.8
|
%
|
|||||||||||||||
|
Total revenues
|
69,804
|
100.0
|
%
|
55,464
|
100.0
|
%
|
14,340
|
25.9
|
%
|
|||||||||||||||
|
Costs of sales/revenues:
|
||||||||||||||||||||||||
|
Cost of services
|
$
|
34,508
|
68.4
|
%
|
$
|
27,475
|
66.5
|
%
|
7,033
|
25.6
|
%
|
|||||||||||||
|
Cost of equipment
|
16,170
|
83.6
|
%
|
11,787
|
83.4
|
%
|
4,383
|
37.2
|
%
|
|||||||||||||||
|
Total costs of sales/revenues
|
50,678
|
72.6
|
%
|
39,262
|
70.8
|
%
|
11,416
|
29.1
|
%
|
|||||||||||||||
|
Gross profit
|
19,126
|
27.4
|
%
|
16,202
|
29.2
|
%
|
2,924
|
18.0
|
%
|
|||||||||||||||
|
Operating expenses:
|
||||||||||||||||||||||||
|
Selling, general and administrative
|
18,649
|
26.7
|
%
|
15,652
|
28.2
|
%
|
2,997
|
19.1
|
%
|
|||||||||||||||
|
Depreciation and amortization
|
774
|
1.1
|
%
|
439
|
0.8
|
%
|
335
|
76.3
|
%
|
|||||||||||||||
|
Total operating expenses
|
19,423
|
27.8
|
%
|
16,091
|
29.0
|
%
|
3,332
|
20.7
|
%
|
|||||||||||||||
|
Operating (loss) income
|
(297
|
)
|
(0.4
|
%)
|
111
|
0.2
|
%
|
(408
|
)
|
(367.6
|
%)
|
|||||||||||||
|
Other income (expense):
|
||||||||||||||||||||||||
|
Interest income
|
387
|
0.6
|
%
|
138
|
0.2
|
%
|
249
|
180.4
|
%
|
|||||||||||||||
|
Interest expense
|
(601
|
)
|
(0.9
|
%)
|
(403
|
)
|
(0.7
|
%)
|
(198
|
)
|
(49.1
|
%)
|
||||||||||||
|
Change in fair value of warrant liabilities
|
(1,490
|
)
|
(2.1
|
%)
|
(5,692
|
)
|
(10.3
|
%)
|
4,202
|
73.8
|
%
|
|||||||||||||
|
Total other expense, net
|
(1,704
|
)
|
(2.4
|
%)
|
(5,957
|
)
|
(10.7
|
%)
|
4,253
|
71.4
|
%
|
|||||||||||||
|
(Loss) before income taxes
|
(2,001
|
)
|
(2.9
|
%)
|
(5,846
|
)
|
(10.5
|
%)
|
3,845
|
65.8
|
%
|
|||||||||||||
|
Provision for income taxes
|
(94
|
)
|
(0.1
|
%)
|
(88
|
)
|
(0.2
|
%)
|
(6
|
)
|
(6.8
|
%)
|
||||||||||||
|
Net loss
|
(2,095
|
)
|
(3.0
|
%)
|
(5,934
|
)
|
(10.7
|
%)
|
3,839
|
64.7
|
%
|
|||||||||||||
|
Cumulative preferred dividends
|
(668
|
)
|
(1.0
|
%)
|
(668
|
)
|
(1.2
|
%)
|
—
|
0.0
|
%
|
|||||||||||||
|
Net loss applicable to common shares
|
(2,763
|
)
|
(4.0
|
%)
|
(6,602
|
)
|
(11.9
|
%)
|
$
|
3,839
|
58.2
|
%
|
||||||||||||
|
Net loss per common share - basic and diluted
|
(0.07
|
)
|
(0.18
|
)
|
$
|
0.11
|
62.1
|
%
|
||||||||||||||||
|
Basic and diluted weighted average number of common shares outstanding
|
39,703,690
|
35,972,633
|
3,731,057
|
10.4
|
%
|
|||||||||||||||||||
| (B) |
Five Quarter Select Key Performance Indicators
|
|
As of and for the three months ended
|
||||||||||||||||||||
|
March 31,
2017 |
December 31,
2016 |
September 30,
2016 |
June 30,
2016 |
March 31,
2016 |
||||||||||||||||
|
Connections:
|
||||||||||||||||||||
|
Gross New Connections
|
40,000
|
25,000
|
22,000
|
33,000
|
34,000
|
|||||||||||||||
|
% from Existing Customer Base
|
88
|
%
|
80
|
%
|
86
|
%
|
83
|
%
|
91
|
%
|
||||||||||
|
Net New Connections
|
35,000
|
21,000
|
19,000
|
28,000
|
32,000
|
|||||||||||||||
|
Total Connections
|
504,000
|
469,000
|
448,000
|
429,000
|
401,000
|
|||||||||||||||
|
Customers:
|
||||||||||||||||||||
|
New Customers Added
|
500
|
500
|
350
|
300
|
125
|
|||||||||||||||
|
Total Customers
|
12,400
|
11,900
|
11,400
|
11,050
|
10,750
|
|||||||||||||||
|
Volumes:
|
||||||||||||||||||||
|
Total Number of Transactions (millions)
|
104.9
|
100.1
|
95.1
|
89.3
|
82.1
|
|||||||||||||||
|
Transaction Volume (millions)
|
$
|
202.5
|
$
|
191.5
|
$
|
183.4
|
$
|
169.0
|
$
|
151.0
|
||||||||||
|
Financing Structure of Connections:
|
||||||||||||||||||||
|
JumpStart
|
8.6
|
%
|
6.8
|
%
|
7.7
|
%
|
6.5
|
%
|
7.4
|
%
|
||||||||||
|
QuickStart & All Others *
|
91.4
|
%
|
93.2
|
%
|
92.3
|
%
|
93.5
|
%
|
92.6
|
%
|
||||||||||
|
Total
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||||||
*Includes credit sales with standard trade receivable terms
| (C) |
Comparative Balance Sheets March 31, 2017 and June 30, 2016
|
|
($ in thousands)
|
March 31,
2017
|
June 30,
2016
|
Change
|
% Change
|
||||||||||||
|
Assets
|
||||||||||||||||
|
Current assets:
|
||||||||||||||||
|
Cash and Cash Equivalents
|
$
|
17,780
|
$
|
19,272
|
$
|
(1,492
|
)
|
(7.7
|
%)
|
|||||||
|
Accounts receivable, less allowance for doubtful accounts of $2,851 and $2,814, respectively
|
6,734
|
4,899
|
1,835
|
37.5
|
%
|
|||||||||||
|
Finance receivables, less allowance for credit losses of $25 and $0, respectively
|
2,057
|
3,588
|
(1,531
|
)
|
(42.7
|
%)
|
||||||||||
|
Inventory, net
|
4,147
|
2,031
|
2,116
|
104.2
|
%
|
|||||||||||
|
Prepaid expenses and other current assets
|
1,628
|
987
|
641
|
64.9
|
%
|
|||||||||||
|
Deferred income taxes
|
2,271
|
2,271
|
—
|
—
|
||||||||||||
|
Total current assets
|
34,617
|
33,048
|
1,569
|
4.7
|
%
|
|||||||||||
|
Finance receivables, less current portion
|
7,548
|
3,718
|
3,830
|
103.0
|
%
|
|||||||||||
|
Other assets
|
137
|
348
|
(211
|
)
|
(60.6
|
%)
|
||||||||||
|
Property and equipment, net
|
9,173
|
9,765
|
(592
|
)
|
(6.1
|
%)
|
||||||||||
|
Deferred income taxes
|
25,359
|
25,453
|
(94
|
)
|
(0.4
|
%)
|
||||||||||
|
Intangibles, net
|
666
|
798
|
(132
|
)
|
(16.5
|
%)
|
||||||||||
|
Goodwill
|
11,492
|
11,703
|
(211
|
)
|
(1.8
|
%)
|
||||||||||
|
Total assets
|
$
|
88,992
|
$
|
84,833
|
$
|
4,159
|
4.9
|
%
|
||||||||
|
Liabilities and shareholders' equity
|
||||||||||||||||
|
Current liabilities:
|
||||||||||||||||
|
Accounts payable
|
$
|
11,529
|
$
|
12,354
|
$
|
(825
|
)
|
(6.7
|
%)
|
|||||||
|
Accrued expenses
|
3,111
|
3,458
|
(347
|
)
|
(10.0
|
%)
|
||||||||||
|
Line of credit, net
|
7,021
|
7,119
|
(98
|
)
|
(1.4
|
%)
|
||||||||||
|
Current obligations under long-term debt
|
786
|
629
|
157
|
25.0
|
%
|
|||||||||||
|
Income taxes payable
|
—
|
18
|
(18
|
)
|
(100.0
|
%)
|
||||||||||
|
Warrant liabilities
|
—
|
3,739
|
(3,739
|
)
|
(100.0
|
%)
|
||||||||||
|
Deferred gain from sale-leaseback transactions
|
255
|
860
|
(605
|
)
|
(70.3
|
%)
|
||||||||||
|
Total current liabilities
|
22,702
|
28,177
|
(5,475
|
)
|
(19.4
|
%)
|
||||||||||
|
Long-term liabilities
|
||||||||||||||||
|
Long-term debt, less current portion
|
1,239
|
1,576
|
(337
|
)
|
(21.4
|
%)
|
||||||||||
|
Accrued expenses, less current portion
|
52
|
15
|
37
|
246.7
|
%
|
|||||||||||
|
Deferred gain from sale-leaseback transactions, less current portion
|
—
|
40
|
(40
|
)
|
(100.0
|
%)
|
||||||||||
|
Total long-term liabilities
|
1,291
|
1,631
|
(340
|
)
|
(20.8
|
%)
|
||||||||||
|
Total liabilities
|
23,993
|
29,808
|
(5,815
|
)
|
(19.5
|
%)
|
||||||||||
|
Shareholders' equity:
|
||||||||||||||||
|
Preferred stock, no par value
|
3,138
|
3,138
|
—
|
0.0
|
%
|
|||||||||||
|
Common stock, no par value
|
245,463
|
233,394
|
12,069
|
5.2
|
%
|
|||||||||||
|
Accumulated deficit
|
(183,602
|
)
|
(181,507
|
)
|
(2,095
|
)
|
(1.2
|
%)
|
||||||||
|
Total shareholders' equity
|
64,999
|
55,025
|
9,974
|
18.1
|
%
|
|||||||||||
|
Total liabilities and shareholders' equity
|
$
|
88,992
|
$
|
84,833
|
$
|
4,159
|
4.9
|
%
|
||||||||
|
Net working capital
|
$
|
11,915
|
$
|
4,871
|
$
|
7,044
|
144.6
|
%
|
||||||||
|
(D)
|
Five Quarter Statement of Operations and Adjusted EBITDA
|
|
For the three months ended
|
||||||||||||||||||||||||||||||||||||||||
|
($ in thousands)
(unaudited)
|
March 31,
2017
|
% of Sales
|
December 31,
2016
|
% of Sales
|
September 30,
2016
|
% of Sales
|
June 30,
2016
|
% of Sales
|
March 31
2016
|
% of Sales
|
||||||||||||||||||||||||||||||
|
Revenues:
|
||||||||||||||||||||||||||||||||||||||||
|
License and transaction fees
|
$
|
17,459
|
66.0
|
%
|
$
|
16,639
|
76.5
|
%
|
$
|
16,365
|
75.8
|
%
|
$
|
15,263
|
69.6
|
%
|
$
|
14,727
|
72.3
|
%
|
||||||||||||||||||||
|
Equipment sales
|
9,001
|
34.0
|
%
|
5,117
|
23.5
|
%
|
5,223
|
24.2
|
%
|
6,681
|
30.4
|
%
|
5,634
|
27.7
|
%
|
|||||||||||||||||||||||||
|
Total revenue
|
26,460
|
100.0
|
%
|
21,756
|
100.0
|
%
|
21,588
|
100.0
|
%
|
21,944
|
100.0
|
%
|
20,361
|
100.0
|
%
|
|||||||||||||||||||||||||
|
Costs of sales/revenues:
|
||||||||||||||||||||||||||||||||||||||||
|
License and transaction fees
|
11,876
|
68.0
|
%
|
11,389
|
68.4
|
%
|
11,243
|
68.7
|
%
|
10,614
|
69.5
|
%
|
9,703
|
65.9
|
%
|
|||||||||||||||||||||||||
|
Equipment sales
|
7,959
|
88.4
|
%
|
4,033
|
78.8
|
%
|
4,178
|
80.0
|
%
|
5,547
|
83.0
|
%
|
4,986
|
88.5
|
%
|
|||||||||||||||||||||||||
|
Total costs of sales/revenues
|
19,835
|
75.0
|
%
|
15,422
|
70.9
|
%
|
15,421
|
71.4
|
%
|
16,161
|
73.6
|
%
|
14,689
|
72.1
|
%
|
|||||||||||||||||||||||||
|
Gross Profit:
|
||||||||||||||||||||||||||||||||||||||||
|
License and transaction fees
|
5,583
|
32.0
|
%
|
5,250
|
31.6
|
%
|
5,122
|
31.3
|
%
|
4,649
|
30.5
|
%
|
5,024
|
34.1
|
%
|
|||||||||||||||||||||||||
|
Equipment sales
|
1,042
|
11.6
|
%
|
1,084
|
21.2
|
%
|
1,045
|
20.0
|
%
|
1,134
|
17.0
|
%
|
648
|
11.5
|
%
|
|||||||||||||||||||||||||
|
Total gross profit
|
6,625
|
25.0
|
%
|
6,334
|
29.1
|
%
|
6,167
|
28.6
|
%
|
5,783
|
26.4
|
%
|
5,672
|
27.9
|
%
|
|||||||||||||||||||||||||
|
Operating expenses:
|
||||||||||||||||||||||||||||||||||||||||
|
Selling, general and administrative
|
5,947
|
22.5
|
%
|
5,793
|
26.6
|
%
|
6,909
|
32.0
|
%
|
6,721
|
30.6
|
%
|
6,094
|
29.9
|
%
|
|||||||||||||||||||||||||
|
Depreciation
|
259
|
1.0
|
%
|
307
|
1.4
|
%
|
208
|
1.0
|
%
|
208
|
0.9
|
%
|
173
|
0.8
|
%
|
|||||||||||||||||||||||||
|
Impairment of intangible asset
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
432
|
2.0
|
%
|
—
|
0.0
|
%
|
|||||||||||||||||||||||||
|
Total operating expenses
|
6,206
|
23.5
|
%
|
6,100
|
28.0
|
%
|
7,117
|
33.0
|
%
|
7,361
|
33.5
|
%
|
6,267
|
30.8
|
%
|
|||||||||||||||||||||||||
|
Operating income (loss)
|
419
|
1.6
|
%
|
234
|
1.1
|
%
|
(950
|
)
|
-4.4
|
%
|
(1,578
|
)
|
-7.2
|
%
|
(595
|
)
|
-2.9
|
%
|
||||||||||||||||||||||
|
Other income (expense):
|
||||||||||||||||||||||||||||||||||||||||
|
Interest income
|
114
|
0.4
|
%
|
200
|
0.9
|
%
|
73
|
0.3
|
%
|
182
|
0.8
|
%
|
67
|
0.3
|
%
|
|||||||||||||||||||||||||
|
Other income
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
|||||||||||||||||||||||||
|
Interest expense
|
(188
|
)
|
-0.7
|
%
|
(201
|
)
|
-0.9
|
%
|
(212
|
)
|
-1.0
|
%
|
(197
|
)
|
-0.9
|
%
|
(180
|
)
|
-0.9
|
%
|
||||||||||||||||||||
|
Change in fair value of warrant liabilities
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
(1,490
|
)
|
-6.9
|
%
|
18
|
0.1
|
%
|
(4,805
|
)
|
-23.6
|
%
|
|||||||||||||||||||||||
|
Total other (expense) income , net
|
(74
|
)
|
-0.3
|
%
|
(1
|
)
|
0.0
|
%
|
(1,629
|
)
|
-7.5
|
%
|
3
|
0.0
|
%
|
(4,918
|
)
|
-24.2
|
%
|
|||||||||||||||||||||
|
Income (loss) before provision for income taxes
|
345
|
1.3
|
%
|
233
|
1.1
|
%
|
(2,579
|
)
|
-11.9
|
%
|
(1,575
|
)
|
-7.2
|
%
|
(5,513
|
)
|
-27.1
|
%
|
||||||||||||||||||||||
|
(Provision) benefit for income taxes
|
(209
|
)
|
-0.8
|
%
|
—
|
0.0
|
%
|
115
|
0.5
|
%
|
703
|
3.2
|
%
|
93
|
0.5
|
%
|
||||||||||||||||||||||||
|
Net income (loss)
|
136
|
0.5
|
%
|
233
|
1.1
|
%
|
(2,464
|
)
|
-11.4
|
%
|
(872
|
)
|
-4.0
|
%
|
(5,420
|
)
|
-26.6
|
%
|
||||||||||||||||||||||
|
Less interest income
|
(114
|
)
|
-0.4
|
%
|
(200
|
)
|
-0.9
|
%
|
(73
|
)
|
-0.3
|
%
|
(182
|
)
|
-0.8
|
%
|
(67
|
)
|
-0.3
|
%
|
||||||||||||||||||||
|
Plus interest expenses
|
188
|
0.7
|
%
|
201
|
0.9
|
%
|
212
|
1.0
|
%
|
197
|
0.9
|
%
|
180
|
0.9
|
%
|
|||||||||||||||||||||||||
|
Plus income tax expense
|
209
|
0.8
|
%
|
—
|
0.0
|
%
|
(115
|
)
|
-0.5
|
%
|
(703
|
)
|
-3.2
|
%
|
(93
|
)
|
-0.5
|
%
|
||||||||||||||||||||||
|
Plus depreciation expense
|
1,165
|
4.4
|
%
|
1,220
|
5.6
|
%
|
1,257
|
5.8
|
%
|
1,272
|
5.8
|
%
|
1,190
|
5.8
|
%
|
|||||||||||||||||||||||||
|
Plus amortization expense
|
45
|
0.2
|
%
|
43
|
0.2
|
%
|
44
|
0.2
|
%
|
44
|
0.2
|
%
|
44
|
0.2
|
%
|
|||||||||||||||||||||||||
|
Plus (less) change in fair value of warrant liabilities
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
1,490
|
6.9
|
%
|
(18
|
)
|
-0.1
|
%
|
4,805
|
23.6
|
%
|
||||||||||||||||||||||||
|
Plus stock-based compensation
|
233
|
0.9
|
%
|
233
|
1.1
|
%
|
211
|
1.0
|
%
|
198
|
0.9
|
%
|
142
|
0.7
|
%
|
|||||||||||||||||||||||||
|
Plus intangible asset impairment
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
432
|
2.0
|
%
|
—
|
0.0
|
%
|
|||||||||||||||||||||||||
|
Plus VendScreen non-recurring charges
|
—
|
0.0
|
%
|
8
|
0.0
|
%
|
101
|
0.5
|
%
|
258
|
1.2
|
%
|
461
|
2.3
|
%
|
|||||||||||||||||||||||||
|
Plus litigation related professional fees
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
33
|
0.2
|
%
|
0.0
|
%
|
105
|
0.5
|
%
|
||||||||||||||||||||||||||
|
Adjusted EBITDA
|
$
|
1,862
|
7.0
|
%
|
$
|
1,738
|
8.0
|
%
|
$
|
696
|
3.2
|
%
|
$
|
626
|
2.9
|
%
|
$
|
1,347
|
6.6
|
%
|
||||||||||||||||||||
See discussion of Non-GAAP financial measures later in this document
|
(E)
|
Five Quarter and YTD Selling, General, & Administrative Expenses
|
|
Three months ended
|
||||||||||||||||||||||||||||||||||||||||
|
($ in thousands)
|
March 31,
2017
|
% of
SG&A
|
December 31,
2016
|
% of
SG&A
|
September 30,
2016
|
% of
SG&A
|
June 30,
2016
|
% of
SG&A
|
March 31,
2016
|
% of
SG&A
|
||||||||||||||||||||||||||||||
|
Salaries and benefit costs
|
$
|
3,060
|
51.5
|
%
|
$
|
2,849
|
49.2
|
%
|
$
|
3,129
|
45.3
|
%
|
$
|
3,050
|
45.4
|
%
|
$
|
2,760
|
45.4
|
%
|
||||||||||||||||||||
|
Marketing related expenses
|
569
|
9.6
|
%
|
578
|
10.0
|
%
|
329
|
4.8
|
%
|
635
|
9.4
|
%
|
362
|
5.9
|
%
|
|||||||||||||||||||||||||
|
Professional services
|
1,472
|
24.8
|
%
|
1,213
|
20.9
|
%
|
2,520
|
36.5
|
%
|
1,533
|
22.8
|
%
|
1,152
|
18.9
|
%
|
|||||||||||||||||||||||||
|
Bad debt expense
|
127
|
2.0
|
%
|
352
|
6.1
|
%
|
97
|
1.3
|
%
|
470
|
7.0
|
%
|
505
|
8.3
|
%
|
|||||||||||||||||||||||||
|
Premises, equipment and insurance costs
|
482
|
8.1
|
%
|
498
|
8.6
|
%
|
499
|
7.2
|
%
|
555
|
8.3
|
%
|
460
|
7.5
|
%
|
|||||||||||||||||||||||||
|
Research and development expenses
|
95
|
1.6
|
%
|
173
|
3.0
|
%
|
124
|
1.8
|
%
|
123
|
1.8
|
%
|
131
|
2.1
|
%
|
|||||||||||||||||||||||||
|
VendScreen non-recurring charges
|
—
|
0.0
|
%
|
8
|
0.1
|
%
|
101
|
1.5
|
%
|
258
|
3.8
|
%
|
461
|
7.6
|
%
|
|||||||||||||||||||||||||
|
Litigation related professional fees
|
—
|
0.0
|
%
|
—
|
0.0
|
%
|
33
|
0.5
|
%
|
51
|
0.8
|
%
|
105
|
1.7
|
%
|
|||||||||||||||||||||||||
|
Other expenses
|
142
|
2.4
|
%
|
122
|
2.1
|
%
|
77
|
1.1
|
%
|
46
|
0.7
|
%
|
158
|
2.6
|
%
|
|||||||||||||||||||||||||
|
Total SG&A expenses
|
$
|
5,947
|
100
|
%
|
$
|
5,793
|
100
|
%
|
$
|
6,909
|
100
|
%
|
$
|
6,721
|
100
|
%
|
$
|
6,094
|
100
|
%
|
||||||||||||||||||||
|
Total Revenue
|
$
|
26,460
|
$
|
21,756
|
$
|
21,588
|
$
|
21,944
|
$
|
20,361
|
||||||||||||||||||||||||||||||
|
SG&A expenses as a percentage of revenue
|
22.5
|
%
|
26.6
|
%
|
32.0
|
%
|
30.6
|
%
|
29.9
|
%
|
||||||||||||||||||||||||||||||
|
Nine months ended
|
||||||||||||||||
|
($ in thousands)
|
March 31,
2017
|
% of
SG&A
|
March 31,
2016
|
% of
SG&A
|
||||||||||||
|
Salaries and benefit costs
|
$
|
9,038
|
48.5
|
%
|
$
|
8,231
|
52.6
|
%
|
||||||||
|
Marketing related expenses
|
1,476
|
7.9
|
%
|
1,030
|
6.6
|
%
|
||||||||||
|
Professional services
|
5,205
|
27.9
|
%
|
2,773
|
17.7
|
%
|
||||||||||
|
Bad debt expense
|
576
|
3.1
|
%
|
980
|
6.3
|
%
|
||||||||||
|
Premises, equipment and insurance costs
|
1,479
|
7.9
|
%
|
1,206
|
7.7
|
%
|
||||||||||
|
Research and development expenses
|
392
|
2.1
|
%
|
359
|
2.3
|
%
|
||||||||||
|
VendScreen non-recurring charges
|
109
|
0.6
|
%
|
584
|
3.7
|
%
|
||||||||||
|
Litigation related professional fees
|
33
|
0.2
|
%
|
105
|
0.7
|
%
|
||||||||||
|
Other expenses
|
341
|
1.8
|
%
|
384
|
2.4
|
%
|
||||||||||
|
Total SG&A expenses
|
$
|
18,649
|
100.0
|
%
|
$
|
15,652
|
100.0
|
%
|
||||||||
|
Total Revenue
|
$
|
69,804
|
$
|
55,464
|
||||||||||||
|
SG&A expenses as a percentage of revenue
|
26.7
|
%
|
28.2
|
%
|
||||||||||||
|
(F)
|
Five Quarter Condensed Balance Sheets
|
|
($ in thousands)
(unaudited) |
March 31,
2017 |
December 31,
2016
|
September 30
2016 |
June 30,
2016 |
March 31,
2016 |
|||||||||||||||
|
Assets
|
||||||||||||||||||||
|
Current assets:
|
||||||||||||||||||||
|
Cash and Cash Equivalents
|
$
|
17,780
|
$
|
18,034
|
$
|
18,198
|
$
|
19,272
|
$
|
14,901
|
||||||||||
|
Accounts receivable, less allowance for doubtful accounts of $2,851 and $2,814, respectively
|
6,734
|
6,796
|
5,840
|
4,899
|
8,345
|
|||||||||||||||
|
Finance receivables, less allowance for credit losses
|
2,057
|
1,442
|
3,349
|
3,588
|
1,677
|
|||||||||||||||
|
Inventory, net
|
4,147
|
4,786
|
4,264
|
2,031
|
2,341
|
|||||||||||||||
|
Other current assets
|
1,628
|
1,764
|
1,439
|
987
|
1,060
|
|||||||||||||||
|
Deferred Income Taxes
|
2,271
|
2,271
|
2,271
|
2,271
|
1,276
|
|||||||||||||||
|
Total current assets
|
34,617
|
35,093
|
35,361
|
33,048
|
29,600
|
|||||||||||||||
|
Finance receivables, less current portion
|
7,548
|
3,956
|
3,962
|
3,718
|
3,042
|
|||||||||||||||
|
Other assets
|
137
|
145
|
163
|
348
|
337
|
|||||||||||||||
|
Property and equipment, net
|
9,173
|
9,433
|
9,570
|
9,765
|
10,584
|
|||||||||||||||
|
Deferred income taxes
|
25,359
|
25,568
|
25,568
|
25,453
|
25,701
|
|||||||||||||||
|
Intangibles, Net
|
666
|
711
|
754
|
798
|
1,273
|
|||||||||||||||
|
Goodwill
|
11,492
|
11,492
|
11,703
|
11,703
|
11,703
|
|||||||||||||||
|
Total assets
|
$
|
88,992
|
$
|
86,398
|
$
|
87,081
|
$
|
84,833
|
$
|
82,240
|
||||||||||
|
Liabilities and shareholders' equity
|
||||||||||||||||||||
|
Current liabilities:
|
||||||||||||||||||||
|
Accounts payable and accrued expenses
|
$
|
14,640
|
$
|
12,002
|
$
|
12,605
|
$
|
15,812
|
$
|
15,368
|
||||||||||
|
Line of credit, net
|
7,021
|
7,078
|
7,258
|
7,119
|
6,980
|
|||||||||||||||
|
Warrant Liabilities
|
-
|
-
|
-
|
3,739
|
5,964
|
|||||||||||||||
|
Other current liabilities
|
1,041
|
1,242
|
1,527
|
1,507
|
1,485
|
|||||||||||||||
|
Total current liabilities
|
22,702
|
20,322
|
21,390
|
28,177
|
29,797
|
|||||||||||||||
|
Long-term liabilities
|
||||||||||||||||||||
|
Total long-term liabilities
|
1,291
|
1,446
|
1,528
|
1,631
|
2,016
|
|||||||||||||||
|
Total liabilities
|
23,993
|
21,768
|
22,918
|
29,808
|
31,813
|
|||||||||||||||
|
Shareholders' equity:
|
||||||||||||||||||||
|
Total shareholders' equity
|
64,999
|
64,630
|
64,163
|
55,025
|
50,427
|
|||||||||||||||
|
Total liabilities and shareholders' equity
|
$
|
88,992
|
$
|
86,398
|
$
|
87,081
|
$
|
84,833
|
$
|
82,240
|
||||||||||
|
Total current assets
|
$
|
34,617
|
$
|
35,093
|
$
|
35,361
|
$
|
33,048
|
$
|
29,600
|
||||||||||
|
Total current liabilities
|
22,702
|
20,322
|
21,390
|
28,177
|
29,797
|
|||||||||||||||
|
Net working capital
|
$
|
11,915
|
$
|
14,771
|
$
|
13,971
|
$
|
4,871
|
$
|
(197
|
)
|
|||||||||
|
(G)
|
Five Quarter Statements of Cash Flows
|
|
Three months ended
|
||||||||||||||||||||
|
($ in thousands)
|
March 31,
2017 |
December 31,
2016 |
September 30,
2016 |
June 30,
2016 |
March 31,
2016 |
|||||||||||||||
|
OPERATING ACTIVITIES:
|
||||||||||||||||||||
|
Net (loss) income
|
$
|
136
|
$
|
233
|
$
|
(2,464
|
)
|
$
|
(872
|
)
|
$
|
(5,420
|
)
|
|||||||
|
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
|
||||||||||||||||||||
|
Charges incurred in connection with the vesting and issuance of common stock for employee and director compensation
|
233
|
233
|
211
|
198
|
142
|
|||||||||||||||
|
Gain on disposal of property and equipment
|
(28
|
)
|
(31
|
)
|
—
|
(110
|
)
|
(15
|
)
|
|||||||||||
|
Amortization of deferred financing fees
|
72
|
(79
|
)
|
105
|
13
|
—
|
||||||||||||||
|
Bad debt expense
|
127
|
352
|
97
|
470
|
506
|
|||||||||||||||
|
Depreciation
|
1,165
|
1,220
|
1,257
|
1,272
|
1,190
|
|||||||||||||||
|
Amortization of intangible assets
|
45
|
43
|
44
|
43
|
44
|
|||||||||||||||
|
Impairment of intangible asset
|
—
|
—
|
—
|
432
|
—
|
|||||||||||||||
|
Change in fair value of warrant liabilities
|
—
|
—
|
1,490
|
(18
|
)
|
4,805
|
||||||||||||||
|
Deferred income taxes, net
|
209
|
—
|
(115
|
)
|
(748
|
)
|
(93
|
)
|
||||||||||||
|
Recognition of deferred gain from sale-leaseback transactions
|
(216
|
)
|
(215
|
)
|
(215
|
)
|
(215
|
)
|
(215
|
)
|
||||||||||
|
Changes in operating assets and liabilities:
|
||||||||||||||||||||
|
Accounts receivable
|
(41
|
)
|
(1,309
|
)
|
(1,038
|
)
|
2,977
|
(1,660
|
)
|
|||||||||||
|
Finance receivables
|
(4,232
|
)
|
2,125
|
(5
|
)
|
(2,587
|
)
|
(366
|
)
|
|||||||||||
|
Inventory
|
647
|
(467
|
)
|
(2,223
|
)
|
(82
|
)
|
250
|
||||||||||||
|
Prepaid expenses and other assets
|
136
|
(318
|
)
|
(224
|
)
|
(397
|
)
|
(160
|
)
|
|||||||||||
|
Accounts payable
|
2,441
|
397
|
(3,661
|
)
|
329
|
4,154
|
||||||||||||||
|
Accrued expenses
|
160
|
(1,061
|
)
|
486
|
115
|
1,166
|
||||||||||||||
|
Income taxes payable
|
(6
|
)
|
(1
|
)
|
(10
|
)
|
453
|
—
|
||||||||||||
|
Net change in operating assets and liabilities
|
(895
|
)
|
(634
|
)
|
(6,675
|
)
|
808
|
3,384
|
||||||||||||
|
Net cash provided (used) by operating activities
|
848
|
1,122
|
(6,265
|
)
|
1,273
|
4,328
|
||||||||||||||
|
INVESTING ACTIVITIES:
|
||||||||||||||||||||
|
Purchase and additions of property and equipment
|
(183
|
)
|
(441
|
)
|
(168
|
)
|
(207
|
)
|
(164
|
)
|
||||||||||
|
Purchase of property for rental program
|
(691
|
)
|
(693
|
)
|
(642
|
)
|
—
|
—
|
||||||||||||
|
Proceeds from sale of property and equipment
|
44
|
61
|
—
|
265
|
19
|
|||||||||||||||
|
Cash paid for assets acquired from VendScreen
|
—
|
—
|
—
|
—
|
(5,625
|
)
|
||||||||||||||
|
Net cash provided by (used in) investing activities
|
(830
|
)
|
(1,073
|
)
|
(810
|
)
|
58
|
(5,770
|
)
|
|||||||||||
|
FINANCING ACTIVITIES:
|
||||||||||||||||||||
|
Cash used for the retirement of common stock
|
—
|
—
|
(31
|
)
|
(173
|
)
|
—
|
|||||||||||||
|
Payment of deferred financing costs
|
(90
|
)
|
—
|
—
|
—
|
—
|
||||||||||||||
|
Proceed from exercise of common stock warrants
|
—
|
—
|
6,193
|
3,237
|
1,652
|
|||||||||||||||
|
Proceed (payments) from line of credit, net
|
—
|
—
|
—
|
138
|
33
|
|||||||||||||||
|
Repayment of long-term debt
|
(182
|
)
|
(213
|
)
|
(161
|
)
|
(162
|
)
|
(151
|
)
|
||||||||||
|
Net cash (used in) provided by financing activities
|
(272
|
)
|
(213
|
)
|
6,001
|
3,040
|
1,534
|
|||||||||||||
|
Net (decrease) increase in cash
|
(254
|
)
|
(164
|
)
|
(1,074
|
)
|
4,371
|
92
|
||||||||||||
|
Cash at beginning of period
|
18,034
|
18,198
|
19,272
|
14,901
|
14,809
|
|||||||||||||||
|
Cash at end of period
|
$
|
17,780
|
$
|
18,034
|
$
|
18,198
|
$
|
19,272
|
$
|
14,901
|
||||||||||
|
Supplemental disclosures of cash flow information:
|
||||||||||||||||||||
|
Interest paid in cash
|
$
|
59
|
$
|
382
|
$
|
87
|
$
|
147
|
$
|
191
|
||||||||||
|
Income taxes paid by cash
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
501
|
$
|
—
|
||||||||||
|
Depreciation expense allocated to cost of services
|
$
|
950
|
$
|
967
|
$
|
1,072
|
$
|
1,139
|
$
|
1,051
|
||||||||||
|
Reclass of rental program property to inventory, net
|
$
|
8
|
$
|
(55
|
)
|
$
|
(11
|
)
|
$
|
415
|
$
|
347
|
||||||||
|
Prepaid items financed with debt
|
$
|
—
|
$
|
—
|
$
|
54
|
$
|
—
|
$
|
—
|
||||||||||
|
Equipment and property acquired under capital lease
|
$
|
54
|
$
|
18
|
$
|
254
|
$
|
—
|
$
|
409
|
||||||||||
|
Disposal of property and equipment
|
$
|
87
|
$
|
570
|
$
|
—
|
$
|
555
|
$
|
189
|
||||||||||
|
Fair value of common stock warrants at issuance recorded as a debt discount
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
52
|
||||||||||
|
Debt financing cost financed with debt
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
79
|
||||||||||
Additional supplements not added
|
(H)
|
Five Quarter Reconciliation of Net Income/(Loss) to Non-GAAP Net Income (Loss) and Net Income/(Loss) Per Common Share – Basic and Diluted to Non-GAAP Net Income/(Loss) Per Common Share – Basic and Diluted
|
|
Three months ended
|
||||||||||||||||||||
|
($ in thousands)
(unaudited) |
March 31,
2017 |
December 31,
2016 |
September 30,
2016 |
June 30,
2016 |
March 31,
2016 |
|||||||||||||||
|
Net income (loss)
|
$
|
136
|
$
|
233
|
$
|
(2,464
|
)
|
$
|
(872
|
)
|
$
|
(5,420
|
)
|
|||||||
|
Non-GAAP adjustments:
|
||||||||||||||||||||
|
Non-cash portion of income tax provision
|
209
|
-
|
(115
|
)
|
(792
|
)
|
(38
|
)
|
||||||||||||
|
Change in fair value of warrant adjustment
|
-
|
-
|
1,490
|
(18
|
)
|
4,805
|
||||||||||||||
|
VendScreen non-recurring charges
|
-
|
8
|
101
|
258
|
461
|
|||||||||||||||
|
Litigation related professional fees
|
-
|
-
|
33
|
51
|
105
|
|||||||||||||||
|
Non-GAAP net income (loss)
|
$
|
345
|
$
|
241
|
$
|
(955
|
)
|
$
|
(1,373
|
)
|
$
|
(87
|
)
|
|||||||
|
Net income (loss)
|
$
|
136
|
$
|
233
|
$
|
(2,464
|
)
|
$
|
(872
|
)
|
$
|
(5,420
|
)
|
|||||||
|
Cumulative preferred dividends
|
(334
|
)
|
-
|
(334
|
)
|
-
|
(334
|
)
|
||||||||||||
|
Net (loss) income applicable to common shares
|
$
|
(198
|
)
|
$
|
233
|
$
|
(2,798
|
)
|
$
|
(872
|
)
|
$
|
(5,754
|
)
|
||||||
|
Non-GAAP net income (loss)
|
$
|
345
|
$
|
241
|
$
|
(955
|
)
|
$
|
(1,373
|
)
|
$
|
(87
|
)
|
|||||||
|
Cumulative preferred dividends
|
(334
|
)
|
-
|
(334
|
)
|
-
|
(334
|
)
|
||||||||||||
|
Non-GAAP net income (loss) applicable to common shares
|
$
|
11
|
$
|
241
|
$
|
(1,289
|
)
|
$
|
(1,373
|
)
|
$
|
(421
|
)
|
|||||||
|
Net earnings (loss) per common share - basic and diluted
|
$
|
(0.00
|
)
|
$
|
0.01
|
$
|
(0.07
|
)
|
$
|
(0.02
|
)
|
$
|
(0.16
|
)
|
||||||
|
Non-GAAP net earnings (loss) per common share - basic and diluted
|
$
|
0.00
|
$
|
0.01
|
$
|
(0.03
|
)
|
$
|
(0.04
|
)
|
$
|
(0.01
|
)
|
|||||||
|
Basic weighted average number of common shares outstanding
|
40,327,697
|
40,308,934
|
38,488,005
|
37,325,681
|
36,161,626
|
|||||||||||||||
|
Diluted weighted average number of common shares outstanding
|
40,327,697
|
40,730,712
|
38,488,005
|
37,325,681
|
36,161,626
|
|||||||||||||||
See discussion of Non-GAAP financial measures later in this document
Discussion of Non-GAAP Financial Measures:
This press release contains certain non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Reconciliations between non-GAAP and GAAP measures are set forth above in Financial Schedules (D) and (H).
The following non-GAAP financial measures are discussed herein: adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net earnings (loss) per common share – basic and diluted. The presentation of these additional financial measures is not intended to be considered in isolation from, or superior to, or as a substitute for the financial measures prepared and presented in accordance with GAAP (Generally Accepted Accounting Principles), including the net income or net loss of USAT or net cash provided/used by operating activities. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with USAT's net income or net loss as determined in accordance with GAAP. These non-GAAP financial measures are not required by or defined under GAAP and may be materially different from the non-GAAP financial measures used by other companies. USAT has provided above in Financial Schedules (D) and (H) the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
As used herein, non-GAAP net income (loss) represents GAAP net income (loss) excluding costs or benefits relating to any adjustment for fair value of warrant liabilities and non-cash portions of the Company’s income tax benefit (provision), non-recurring fees and charges that were incurred in connection with the acquisition and integration of the VendScreen business, and professional fees incurred in connection with the class action litigation and the special litigation committee investigation described in our Form 10-K for the 2016 fiscal year. Non-GAAP net earnings (loss) per common share - diluted is calculated by dividing non-GAAP net income (loss) applicable to common shares by the number of diluted weighted average shares outstanding. Management believes that non-GAAP net income (loss) is an important measure of USAT’s business. Non-GAAP net income (loss) is a non-GAAP financial measure which is not required by or defined under GAAP (Generally Accepted Accounting Principles). The presentation of this financial measure is not intended to be considered in isolation or as a substitute for the financial measures prepared and presented in accordance with GAAP, including the net income or net loss of the Company or net cash used in operating activities. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with the Company’s net income or net loss as determined in accordance with GAAP, and are not a substitute for or a measure of the Company’s profitability or net earnings. Management believes that non-GAAP net income (loss) and non-GAAP net earnings (loss) per share are important measures of the Company's business. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends and to gain an understanding of our comparative operating performance. We believe that this non-GAAP financial measure serves as a useful metric for our management and investors because they enable a better understanding of the long-term performance of our core business and facilitate comparisons of our operating results over multiple periods, and when taken together with the corresponding GAAP (United States’ Generally Accepted Accounting Principles) financial measures and our reconciliations, enhance investors’ overall understanding of our current and future financial performance. Additionally, the Company utilizes non-GAAP net income (loss) as a metric in its executive officer and management incentive compensation plans.
As used herein, Adjusted EBITDA represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, non-recurring fees and charges that were incurred in connection with the acquisition and integration of the VendScreen business, professional fees incurred in connection with the class action litigation incurred during the third quarter of the prior fiscal year, impairment charges related to our EnergyMiser asset trademarks, change in fair value of warrant liabilities, and stock-based compensation expense. We have excluded the non-operating item, change in fair value of warrant liabilities, because it represents a non-cash gain or charge that is not related to the Company’s operations. We have excluded the non-cash expense, stock-based compensation, as it does not reflect the cash-based operations of the Company. We have excluded the non-recurring costs and expenses incurred in connection with the VendScreen transaction in order to allow more accurate comparison of the financial results to historical operations. We have excluded the professional fees incurred in connection with the class action litigation as well as the trademark impairment charges because we believe that they represent a charge that is not related to the Company's operations. Adjusted EBITDA is a non-GAAP financial measure which is not required by or defined under GAAP (Generally Accepted Accounting Principles). The presentation of this financial measure is not intended to be considered in isolation or as a substitute for the financial measures prepared and presented in accordance with GAAP, including the net income or net loss of the Company or net cash provided/used by operating activities. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with the Company’s net income or net loss as determined in accordance with GAAP, and are not a substitute for or a measure of the Company’s profitability or net earnings. Adjusted EBITDA is presented because we believe it is useful to investors as a measure of comparative operating performance. Additionally, the Company utilizes Adjusted EBITDA as a metric in its executive officer and management incentive compensation plans.
Investor Contact:
Mike Bishop
The Blueshirt Group
Tel: +1 415-217-4968
mike@blueshirtgroup.com
Source: USA Technologies, Inc.
F-USAT