USA Technologies, Inc. (NASDAQ: USAT),
(“USAT”), a leader of wireless, cashless payment and M2M telemetry
solutions for self-serve, small-ticket retail industries, today reported
results for the third quarter of fiscal 2013 ended March 31, 2013. Third
quarter highlights, compared to the corresponding quarter of the prior
fiscal year, included:
-
19% increase in total revenues to $9 million, including 26% increase
in license and transaction fee revenues (“recurring revenues”) to $7.6
million, which represented 84% of total revenues for the quarter;
-
32% increase in gross profit to $3.7 million, up from $2.8 million;
-
Adjusted EBITDA of $1.7 million, up from $0.3 million;
-
GAAP net loss of ($1.0) million (includes $1.3 million Other Expense
for fair value of warrants), from a GAAP net loss of ($0.5) million
(includes $.1 million Other Income for fair value of warrants); and,
-
Non-GAAP net income of $293,011, up from a non-GAAP net loss of
($633,692) in the same quarter a year ago.
Total connections to USAT’s cashless payment and M2M telemetry service,
ePort Connect®, were 196,000 as of March 31, 2013, a 32% increase from
the prior fiscal year, fueled in the third quarter by 10,000 net new
connections to the service. Total connections as of March 31, 2012 were
148,000, fueled by 12,000 net new connections in that quarter. New ePort
Connect customers added in the quarter totaled 425, for 4,525 total
customers, contributing to a 59% increase in USAT’s customer base from
2,850 customers since the same period in fiscal 2012.
During April, USAT entered into an exclusive agreement with a new
customer in a vertical market in which it is already
participating—commercial laundry. The customer has its own cashless
payment hardware platform for the laundry industry which would now
utilize USAT’s network for credit/debit card processing. USAT
anticipates that the initial connections to its ePort Connect service
under the agreement would be several thousand. The customer and USAT
will also use good faith efforts to achieve certain annual targets in
terms of connections during the three year term of the agreement.
Stephen P. Herbert, Chairman and CEO of USA Technologies, stated, “Our
results for the quarter reflect a number of dynamics in this emerging
market. In spite of our momentum, connections were not what we expected
this quarter, as several of the agreements we have been working on since
early in the fiscal year have taken longer to materialize than we
anticipated. We remain encouraged, however, by the work underway to get
our new laundry customer’s connections on our service, as well as our
accomplishments in the quarter in many areas of the business that we
believe are essential to driving increased adoption in the marketplace.
“During the third quarter, we expanded our sales reach in the $5
billion, coin-operated amusement and gaming market with a new
distribution agreement with Betson Enterprises, with Ameri-Source for
small-medium size vending companies, and we expanded into
non-traditional vending with companies like Ice House America, a network
of over 2,400 independently owned ice house locations,” continued
Herbert. “While these don’t translate to connections overnight, we
believe they nevertheless extend our opportunity for growth longer-term
as cashless payment adoption accelerates.
“Much of our work during the third quarter also related to the formation
of agreements and development to facilitate introduction of our new
value-add services that we anticipate will extend USAT’s differentiation
in the marketplace, as well as our next generation ePort G9 and G10,
designed to deliver greater value and improved functionality to our
customers while reducing the capital required by USAT for our JumpStart
program. For example, we believe our mobile payment and loyalty
promotion with Isis is the largest offering of its kind ever introduced
to the U.S. vending market. Isis’ interest in loyalty is spot on with
our own initiatives in this area that include an expanded services suite
formed around loyalty that is tailored to the individual business
operator.
“In summary, there are numerous developments that we believe will
continue to attract consumers to cashless forms of payment, including
mobile payment, loyalty, couponing and other consumer engagement
applications,” said Herbert. “We have accumulated a base of 4,525 ePort
Connect customers that we will continue to work closely with in this
very transformative time in the unattended, small-ticket market. Through
products and service enhancements, our goal is to improve customer ROI
on all levels, which should continue to help boost the rate of cashless
adoption, and USAT’s continued leadership in this emerging market,”
concluded Herbert.
Third Quarter Results
Revenues for the third quarter of fiscal 2013 were $9.0 million, an
increase of 19% from the same period a year ago. Revenue growth was
fueled by a 26% growth in license and transaction fees, offset by a
$125,000 decline in equipment sales compared to the third quarter of
fiscal 2012. The decline in equipment sales stemmed from a decrease in
sales from USAT’s EnergyMiser product line, offset in part by increased
sales of ePort cashless payment and telemetry devices in the quarter.
Revenue from license and transaction fees, which is driven by
connections to USAT’s ePort Connect service through monthly service
fees, JumpStart fees and transaction processing fees, grew to $7.6
million for the third quarter, a 26% increase from the third quarter of
fiscal 2012. The ePort Connect service base reached 196,000 connections
as of March 31, 2013, representing a 32% increase from March 31, 2012.
Gross profit was $3.7 million in the third quarter, a 32% improvement
from $2.8 million for the same period in the prior year. Gross profit
margin improved to 41% in the second quarter, from 37% for the prior
year. Gross profit margin is largely impacted by revenues from license
and transaction fees, which were 84% of total revenues for the quarter
ended March 31, 2013.
Operating margin was 3.9% compared to (8.5%) for the same period in the
prior year, due to stronger revenues, improvements in gross margins and
lower operating expenses.
For the third quarter, a $1.3 million charge for fair value of warrant
liability adjustment for the 4.2 million of warrants expiring in
September 2016 contributed to a GAAP net loss of ($1.0) million. The
fair value of warrant liability adjustment is based, in part, on
increases in USAT’s stock price and other market factors that occurred
during the quarter. Conversely, for the same period in the prior year,
GAAP net loss was ($0.5) million, which included a $95,074 positive
warrant liability adjustment. Non-GAAP net income, which excludes fair
value of warrant liability adjustments for both years, was $293,011,
compared to a non-GAAP net loss of ($633,692) for the third quarter of
fiscal 2012. (see non-GAAP Reconciliation table.)
After preferred dividends, net loss per common share was ($.04) for the
third quarter of Fiscal 2013 compared to ($.03) for the same period in
Fiscal 2012. On a non-GAAP basis, net loss per common share was $.0 for
the third quarter of Fiscal 2013 compared to ($.03) for the same period
in Fiscal 2012.
Webcast and Conference Call
USA Technologies will conduct a conference call and webcast at 10:00
a.m. Eastern Time on May 10, 2013. USA Technologies invites all
interested parties to listen to the live webcast of the conference call,
accessible on the Investor
Relations section of USA Technologies’ website. The webcast will be
archived on the website within two hours of the live call. It will
remain available for approximately 90 days. Interested parties unable to
access the webcast may also participate by calling (866) 393-1608 or, if
an international caller, (224) 357-2194. A replay of the call, available
until midnight on May 13, 2013, can be accessed by calling (855)
859-2056; Conference ID#33897356, (toll free).
Forward-looking Statements:
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: All statements other than statements of historical fact
included in this release, including without limitation the financial
position, achieving profitability or non-GAAP net income or cash flow
from operations, anticipated connections to our network, 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 USAT to generate sufficient sales to
generate operating profits, or conduct operations at a profit; 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, including the commercial production and
introduction of our next generation G-9 and G-10 devices; the ability of
USAT to retain key customers from whom a significant portion of its
revenues is derived; whether USAT’s customers would continue to add
additional connections to our network in the future at levels currently
anticipated by USAT, including appropriate diversification resulting
from products and programs other than our Jumpstart Program; 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
obtain widespread commercial acceptance of its products; the ability of
USAT to raise funds in the future through the sales of securities in
order to sustain its operations if an unexpected or unusual
non-operational event would occur; whether USAT can timely manufacture
and introduce to the marketplace its next generation G-9 and G-10
devices; the ability of USAT to obtain widespread commercial acceptance
of its next generation G-9 and G-10 devices or its loyalty and prepaid
programs; and whether USAT’s existing or anticipated customers purchase,
rent or utilize ePort devices in the future at levels currently
anticipated by USAT. Readers are cautioned not to place undue reliance
on these forward-looking statements. Any forward-looking statement made
by us in this release speaks only as of the date of this release. Unless
required by law, USAT does not undertake to release publicly any
revisions to these forward-looking statements to reflect future events
or circumstances or to reflect the occurrence of unanticipated events.
|
USA Technologies, Inc. Consolidated Statements of
Operations (Unaudited)
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Three months ended March 31,
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Nine months ended March 31,
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2013
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2012
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2013
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2012
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Revenues:
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License and transaction fees
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$
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7,562,589
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$
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5,985,052
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$
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21,872,187
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$
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16,988,179
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Equipment sales
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1,418,215
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1,541,999
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4,383,216
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4,126,218
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Total revenues
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8,980,804
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7,527,051
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26,255,403
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21,114,397
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Cost of services
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4,525,244
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3,749,862
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13,080,816
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11,494,690
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Cost of equipment
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774,221
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981,969
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2,748,785
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2,836,995
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Gross profit
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3,681,339
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2,795,220
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10,425,802
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6,782,712
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Operating expenses:
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Selling, general and administrative
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3,003,231
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3,040,562
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8,918,030
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10,039,712
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Depreciation and amortization
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327,889
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391,859
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1,004,134
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1,139,500
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Total operating expenses
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3,331,120
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3,432,421
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9,922,164
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11,179,212
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Operating income (loss)
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350,219
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(637,201)
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503,638
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(4,396,500)
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Other income (expense):
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Interest income
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11,082
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14,029
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52,910
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45,183
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Interest expense
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(61,379)
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(10,520)
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(109,402)
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(70,756)
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Change in fair value of warrant liabilities
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(1,308,954)
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95,074
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(1,249,456)
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1,983,442
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Total other income (expense), net
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(1,359,251)
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98,583
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(1,305,948)
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1,957,869
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Loss before provision for income taxes
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(1,009,032)
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(538,618)
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(802,310)
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(2,438,631)
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Provision for income taxes
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(6,911)
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-
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(20,734)
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-
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Net loss
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(1,015,943)
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(538,618)
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(823,044)
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(2,438,631)
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Cumulative preferred dividends
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(332,226)
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(332,226)
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(664,452)
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(664,452)
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Net loss applicable to common shares
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$
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(1,348,169)
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$
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(870,844)
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$
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(1,487,496)
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$
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(3,103,083)
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Net loss per common share (basic and diluted)
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$
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(0.04)
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$
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(0.03)
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$
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(0.05)
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$
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(0.10)
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Weighted average number of common shares outstanding (basic
and diluted)
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32,821,345
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32,466,528
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32,690,374
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32,400,049
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USA Technologies, Inc. Consolidated Balance Sheets
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March 31, 2013
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June 30, 2012
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(Unaudited)
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Assets
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Current assets:
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Cash and cash equivalents
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$
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3,948,537
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$
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6,426,645
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Accounts receivable, less allowance for uncollectible accounts of
$9,000 and $25,000, respectively
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2,370,993
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2,441,941
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Finance receivables
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113,485
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206,649
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Inventory
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1,838,557
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2,511,748
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Prepaid expenses and other current assets
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656,306
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555,823
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Total current assets
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8,927,878
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12,142,806
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Finance receivables, less current portion
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381,946
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336,198
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Property and equipment, net
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15,528,584
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11,800,108
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Intangibles, net
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639,653
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1,196,453
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Goodwill
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7,663,208
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7,663,208
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Other assets
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88,101
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80,884
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Total assets
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$
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33,229,370
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$
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33,219,657
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Liabilities and shareholders’ equity
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Current liabilities:
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Accounts payable
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$
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5,332,568
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$
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6,136,443
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Accrued expenses
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1,601,362
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3,342,456
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Line of credit
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2,000,000
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-
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Current obligations under long-term debt
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314,756
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466,056
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Total current liabilities
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9,248,686
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9,944,955
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Long-term liabilities:
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Long-term debt, less current portion
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159,775
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262,274
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Accrued expenses, less current portion
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374,856
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426,241
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Deferred tax liabilities
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33,333
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12,599
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Warrant liabilities, non-current
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2,168,022
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|
918,566
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Total long-term liabilities
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2,735,986
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1,619,680
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Total liabilities
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11,984,672
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11,564,635
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Commitments and contingencies
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Shareholders’ equity:
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Preferred stock, no par value:
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Authorized shares- 1,800,000 Series A convertible preferred-
Authorized shares- 900,000 Issued and outstanding shares-
442,968 (liquidation preference of $16,026,004 and
$15,361,552, respectively)
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|
|
|
3,138,056
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|
|
|
|
3,138,056
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Common stock, no par value: Authorized shares- 640,000,000 Issued
and outstanding shares- 32,878,702 and 32,510,069,
respectively
|
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|
|
|
220,926,047
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|
|
|
|
220,513,327
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Accumulated deficit
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(202,819,405)
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|
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(201,996,361)
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Total shareholders’ equity
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21,244,698
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|
|
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21,655,022
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Total liabilities and shareholders’ equity
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$
|
33,229,370
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|
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$
|
33,219,657
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|
|
|
|
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USA Technologies, Inc. Consolidated Statements of
Cash Flows (Unaudited)
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Three months ended March 31,
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Nine months ended March 31,
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2013
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2012
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2013
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2012
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OPERATING ACTIVITIES:
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Net loss
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$
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(1,015,943
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)
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|
|
$
|
|
(538,618
|
)
|
|
|
|
$
|
|
(823,044
|
)
|
|
|
|
$
|
|
(2,438,631
|
)
|
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges incurred in connection with the vesting and issuance of
common stock for employee and director compensation
|
|
|
|
|
|
149,009
|
|
|
|
|
|
|
83,300
|
|
|
|
|
|
|
369,233
|
|
|
|
|
|
|
510,797
|
|
Change in fair value of warrant liabilities
|
|
|
|
|
|
1,308,954
|
|
|
|
|
|
|
(95,074
|
)
|
|
|
|
|
|
1,249,456
|
|
|
|
|
|
|
(1,983,442
|
)
|
Depreciation
|
|
|
|
|
|
1,003,610
|
|
|
|
|
|
|
631,330
|
|
|
|
|
|
|
2,742,196
|
|
|
|
|
|
|
1,747,445
|
|
Loss on disposal of property and equipment
|
|
|
|
|
|
(14,815
|
)
|
|
|
|
|
|
13,844
|
|
|
|
|
|
|
(18,415
|
)
|
|
|
|
|
|
1,841
|
|
Amortization
|
|
|
|
|
|
185,600
|
|
|
|
|
|
|
258,600
|
|
|
|
|
|
|
556,800
|
|
|
|
|
|
|
775,800
|
|
Non-cash interest and amortization of debt discount
|
|
|
|
|
|
26,934
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
26,934
|
|
|
|
|
|
|
-
|
|
Bad debt expense (recoveries), net
|
|
|
|
|
|
(1,599
|
)
|
|
|
|
|
|
(3,788
|
)
|
|
|
|
|
|
7,459
|
|
|
|
|
|
|
(45,356
|
)
|
Provision for deferred tax liability
|
|
|
|
|
|
6,911
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
20,734
|
|
|
|
|
|
|
-
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
|
(1,212,990
|
)
|
|
|
|
|
|
(484,290
|
)
|
|
|
|
|
|
63,489
|
|
|
|
|
|
|
(451,770
|
)
|
Finance receivables
|
|
|
|
|
|
22,714
|
|
|
|
|
|
|
(44,103
|
)
|
|
|
|
|
|
47,416
|
|
|
|
|
|
|
(78,215
|
)
|
Inventory
|
|
|
|
|
|
603,019
|
|
|
|
|
|
|
108,302
|
|
|
|
|
|
|
685,114
|
|
|
|
|
|
|
(562,988
|
)
|
Prepaid expenses and other assets
|
|
|
|
|
|
59,841
|
|
|
|
|
|
|
(153,012
|
)
|
|
|
|
|
|
51,730
|
|
|
|
|
|
|
(290,883
|
)
|
Accounts payable
|
|
|
|
|
|
(1,115,013
|
)
|
|
|
|
|
|
291,263
|
|
|
|
|
|
|
(803,875
|
)
|
|
|
|
|
|
(1,030,781
|
)
|
Accrued expenses
|
|
|
|
|
|
(223,669
|
)
|
|
|
|
|
|
164,417
|
|
|
|
|
|
|
(1,792,479
|
)
|
|
|
|
|
|
1,054,468
|
|
Net cash provided by (used in) operating activities
|
|
|
|
|
|
(217,437
|
)
|
|
|
|
|
|
232,171
|
|
|
|
|
|
|
2,382,748
|
|
|
|
|
|
|
(2,791,715
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
|
|
|
(31,413
|
)
|
|
|
|
|
|
(30,158
|
)
|
|
|
|
|
|
(81,691
|
)
|
|
|
|
|
|
(404,103
|
)
|
Purchase of property for rental program
|
|
|
|
|
|
(1,778,344
|
)
|
|
|
|
|
|
(1,226,518
|
)
|
|
|
|
|
|
(6,320,514
|
)
|
|
|
|
|
|
(3,282,512
|
)
|
Proceeds from sale of property and equipment
|
|
|
|
|
|
18,908
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
18,908
|
|
|
|
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
|
|
|
(1,790,849
|
)
|
|
|
|
|
|
(1,256,676
|
)
|
|
|
|
|
|
(6,383,297
|
)
|
|
|
|
|
|
(3,686,615
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from the issuance (retirement) of common stock
and exercise of common stock warrants
|
|
|
|
|
|
74,840
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
(12,475
|
)
|
|
|
|
|
|
(2,031
|
)
|
Proceeds from line of credit, net of repayments
|
|
|
|
|
|
1,000,000
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
2,000,000
|
|
|
|
|
|
|
-
|
|
Repayment of long-term debt
|
|
|
|
|
|
(164,363
|
)
|
|
|
|
|
|
(111,841
|
)
|
|
|
|
|
|
(465,084
|
)
|
|
|
|
|
|
(317,115
|
)
|
Net cash provided by (used in) financing activities
|
|
|
|
|
|
910,477
|
|
|
|
|
|
|
(111,841
|
)
|
|
|
|
|
|
1,522,441
|
|
|
|
|
|
|
(319,146
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
|
|
|
(1,097,809
|
)
|
|
|
|
|
|
(1,136,346
|
)
|
|
|
|
|
|
(2,478,108
|
)
|
|
|
|
|
|
(6,797,476
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
|
5,046,346
|
|
|
|
|
|
|
7,330,381
|
|
|
|
|
|
|
6,426,645
|
|
|
|
|
|
|
12,991,511
|
|
Cash and cash equivalents at end of period
|
|
|
|
$
|
|
3,948,537
|
|
|
|
|
$
|
|
6,194,035
|
|
|
|
|
$
|
|
3,948,537
|
|
|
|
|
$
|
|
6,194,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
|
$
|
|
32,551
|
|
|
|
|
$
|
|
11,619
|
|
|
|
|
$
|
|
84,220
|
|
|
|
|
$
|
|
28,419
|
|
Equipment and software acquired under capital lease
|
|
|
|
$
|
|
80,883
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
80,883
|
|
|
|
|
$
|
|
495,955
|
|
Equipment and software financed with long-term debt
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
40,871
|
|
Prepaid items financed with debt
|
|
|
|
$
|
|
2,340
|
|
|
|
|
$
|
|
28,419
|
|
|
|
|
$
|
|
130,402
|
|
|
|
|
$
|
|
28,419
|
|
Prepaid interest from issuance of warrants for debt costs
|
|
|
|
$
|
|
55,962
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
55,962
|
|
|
|
|
$
|
|
-
|
|
Disposal of property and equipment
|
|
|
|
$
|
|
7,700
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
7,700
|
|
|
|
|
$
|
|
54,638
|
|
Reclass of rental program property to inventory
|
|
|
|
$
|
|
2,296
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
11,923
|
|
|
|
|
$
|
|
-
|
|
Depreciation expense allocated to cost of sales
|
|
|
|
$
|
|
861,321
|
|
|
|
|
$
|
|
498,071
|
|
|
|
|
$
|
|
2,294,862
|
|
|
|
|
$
|
|
1,383,745
|
|
|
USA Technologies, Inc.
Non-GAAP Schedules
Discussion of Non-GAAP Financial Measures
This press release includes the following measures defined as non-GAAP
financial measures by the Securities and Exchange Commission: adjusted
EBITDA, non-GAAP net income (loss) , non-GAAP operating margin, and
non-GAAP diluted earnings (loss) per common share. The presentation of
these additional financial measures are not intended to be considered in
isolation from, or superior to, or as a substitute for the financial
measures prepared and presented in accordance with GAAP (Generally
Accepted Accounting Principles), including the net income or net loss of
USAT or net cash used in operating activities. Management recognizes
that non-GAAP financial measures have limitations in that they do not
reflect all of the items associated with USAT’s net income or net loss
as determined in accordance with GAAP. These non-GAAP financial measures
are not required by or defined under GAAP and may be materially
different from the non-GAAP financial measures used by other companies.
USAT has provided 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 any adjustment for fair value of warrant liabilities
and any charges for impairment of intangible assets. As used herein,
non-GAAP diluted earnings (loss) per common share is calculated by
dividing non-GAAP net income (loss) applicable to common shares by the
diluted weighted average number of shares outstanding.
Management believes that non-GAAP net income (loss) and non-GAAP diluted
earnings (loss) per common share are important measures of USAT’s
business. Management uses the aforementioned non-GAAP measures to
monitor and evaluate ongoing operating results and trends and to gain an
understanding of our comparative operating performance. We believe that
these non-GAAP financial measures serve as useful metrics for our
management and investors because they enable a better understanding of
the long-term performance of our core business and facilitate
comparisons of our operating results over multiple periods, and when
taken together with the corresponding GAAP financial measures and our
reconciliations, enhance investors’ overall understanding of our current
and future financial performance.
As used herein, Adjusted EBITDA represents net income (loss) before
interest income, interest expense, income taxes, depreciation,
amortization, and change in fair value of warrant liabilities and
stock-based compensation expense and impairment expense on intangible
assets. We have excluded the non-operating item, change in fair value of
warrant liabilities, because it represents a non-cash charge that is not
related to USAT’s operations. We have excluded the non-cash expenses,
stock-based compensation and impairment expense, as they do not reflect
the cash-based operations of USAT. Adjusted EBITDA is presented because
we believe it is useful to investors as a measure of comparative
operating performance and liquidity, and because it is less susceptible
to variances in actual performance resulting from depreciation and
amortization and non-cash charges for changes in fair value of warrant
liabilities and stock-based compensation expense.
As used herein, operating margin represents operating income or loss
divided by revenues and non-GAAP operating margin represents operating
income or loss excluding any adjustment for impairment of intangible
assets divided by revenues.
|
Non-GAAP Reconciliation Reconciliation of Net Loss
to Non-GAAP Net Income (Loss) and Net Loss Per Common
Share to Non-GAAP Net Earnings (Loss) Per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
3/31/2013
|
|
|
|
|
3/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
$
|
|
(1,015,943
|
)
|
|
|
|
$
|
|
(538,618
|
)
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
Fair value of warrant adjustment
|
|
|
|
|
|
|
1,308,954
|
|
|
|
|
|
|
(95,074
|
)
|
Non-GAAP net income (loss)
|
|
|
|
|
$
|
|
293,011
|
|
|
|
|
$
|
|
(633,692
|
)
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
$
|
|
(1,015,943
|
)
|
|
|
|
$
|
|
(538,618
|
)
|
Non-GAAP net income (loss)
|
|
|
|
|
$
|
|
293,011
|
|
|
|
|
$
|
|
(633,692
|
)
|
|
|
|
|
|
|
|
|
|
|
Cumulative preferred dividends
|
|
|
|
|
|
|
(332,226
|
)
|
|
|
|
|
|
(332,226
|
)
|
Net loss applicable to common shares
|
|
|
|
|
$
|
|
(1,348,169
|
)
|
|
|
|
$
|
|
(870,844
|
)
|
Non-GAAP net loss applicable to common shares
|
|
|
|
|
$
|
|
(39,215
|
)
|
|
|
|
$
|
|
(965,918
|
)
|
Weighted average number of common shares outstanding (basic
and diluted)
|
|
|
|
|
|
|
32,821,345
|
|
|
|
|
|
|
32,466,528
|
|
Net loss per common share (basic and diluted)
|
|
|
|
|
$
|
|
(0.04
|
)
|
|
|
|
$
|
|
(0.03
|
)
|
Non-GAAP net loss per common share (basic and diluted)
|
|
|
|
|
$
|
|
(0.00
|
)
|
|
|
|
$
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non GAAP Reconciliation Reconciliation of Operating
Margin to Non-GAAP Operating Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
3/31/2013
|
|
|
|
3/31/2012
|
Operating income (loss)
|
|
|
|
$
|
|
350,219
|
|
|
|
$
|
|
(637,201)
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
Operating income (loss), Non-GAAP
|
|
|
|
$
|
|
350,219
|
|
|
|
$
|
|
(637,201)
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
|
8,980,804
|
|
|
|
$
|
|
7,527,051
|
|
|
|
|
|
|
|
|
|
Operating Margin
|
|
|
|
|
|
3.9%
|
|
|
|
|
|
-8.5%
|
Operating Margin, Non-GAAP
|
|
|
|
|
|
3.9%
|
|
|
|
|
|
-8.5%
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net Earnings to Adjusted Earnings Before
Interest, Taxes, Depreciation and Amortization (Adjusted
EBITDA)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
3/31/2013
|
|
|
|
3/31/2012
|
Net income (loss)
|
|
|
|
|
$
|
|
(1,015,943)
|
|
|
|
$
|
|
(538,618)
|
Less interest income
|
|
|
|
|
|
|
(11,082)
|
|
|
|
|
|
(14,029)
|
Plus interest expenses
|
|
|
|
|
|
|
61,379
|
|
|
|
|
|
10,520
|
Plus income tax expense
|
|
|
|
|
|
|
6,911
|
|
|
|
|
|
-
|
Plus depreciation expense
|
|
|
|
|
|
|
1,003,610
|
|
|
|
|
|
631,330
|
Plus amortization expense
|
|
|
|
|
|
|
185,600
|
|
|
|
|
|
258,600
|
Less change in fair value of warrant liabilities
|
|
|
|
|
|
|
1,308,954
|
|
|
|
|
|
(95,074)
|
Plus stock-based compensation
|
|
|
|
|
|
|
149,009
|
|
|
|
|
|
83,300
|
Adjusted EBITDA
|
|
|
|
|
$
|
|
1,688,438
|
|
|
|
$
|
|
336,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-USAT
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