Exhibit 99.1
 

USA Technologies Announces Third Quarter Fiscal Year 2016 Results

MALVERN, Pa. May 12, 2016 – 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, 2016.

Third Quarter Financial Highlights:

Total quarterly revenue of $20.4 million, a year-over-year increase of 33%

32,000 net connections for the quarter compared to 14,000 in the same quarter last year, a year-over-year increase of 129%

401,000 connections to ePort service, including 6,000 new connections attributable to the VendScreen acquisition which closed on January 15, 2016, representing a year-over-year increase of 33%

Record 10,825 customers compared to 8,925 as of a year ago, a year-over-year increase of 21%

Quarterly record license and transaction fee revenue of $14.7 million, a year-over-year increase of 33%

$4.3 million of cash provided by operating activities representing the fifth straight quarter of positive operating cash flow

Quarterly GAAP net loss of $5.4 million, including the impact of a $4.8 million non-cash expense for the fair value warrant liability adjustment, $461,000 of non-recurring expenses relating to the acquisition and integration of the VendScreen business, and $105,000 of professional fees incurred in connection with the class action litigation which was dismissed by the court in April 2016

Quarterly Non-GAAP net loss of $87,000, or $(0.01) per share

Quarterly adjusted EBITDA of $1.3 million
 

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results

Third Quarter Financial Highlights & Transaction Data:

   
Nine months ended, unless noted
March 31,
             
(Connections, transactions and $'s in thousands, except per share data)
 
2016
   
2015
   
# Change
   
% Change
 
                         
Revenues:
                       
License and transaction fees
 
$
41,326
   
$
31,695
   
$
9,631
     
30
%
Equipment sales
   
14,138
     
8,736
     
5,402
     
62
%
Total revenues
 
$
55,464
   
$
40,431
   
$
15,033
     
37
%
                                 
License and transaction fees gross margin
   
33.5
%
   
32.0
%
   
1.5
%
   
5
%
                                 
Equipment sales gross margin
   
16.6
%
   
21.6
%
   
(5.0
%)
   
-23
%
                                 
Operating income (loss)
 
$
111
   
$
115
   
$
(4
)
   
-3.5
%
                                 
Adjusted EBITDA
 
$
5,358
   
$
5,007
   
$
351
     
7.0
%
                                 
Net loss
 
$
(5,934
)
 
$
(889
)
 
$
(5,045
)
   
567.5
%
                                 
Net earnings (loss) per common share - diluted
 
$
(0.18
)
 
$
(0.04
)
 
$
(0.14
)
   
312.8
%
                                 
Net New Connections
   
68
     
36
     
32
     
89
%
                                 
Total Connections (at period end)
   
401
     
302
     
99
     
33
%
                                 
Total Number of Transactions
   
226,798
     
154,500
     
72,298
     
47
%
                                 
Transaction Volume
 
$
415,423
   
$
276,200
   
$
139,223
     
50
%
 
   
Three months ended, unless noted
March 31,
             
(Connections, transactions and $'s in thousands, except per share data)
 
2016
   
2015
   
# Change
   
% Change
 
                         
Revenues:
                       
License and transaction fees
 
$
14,727
   
$
11,059
   
$
3,668
     
33
%
Equipment sales
   
5,634
     
4,298
     
1,336
     
31
%
Total revenues
 
$
20,361
   
$
15,357
   
$
5,004
     
33
%
                                 
License and transaction fees gross margin
   
34.1
%
   
35.3
%
   
(1.2
%)
   
-3
%
                                 
Equipment sales gross margin
   
11.5
%
   
28.9
%
   
(17.4
%)
   
-60
%
                                 
Operating income (loss)
 
$
(595
)
 
$
730
   
$
(1,325
)
   
-181.5
%
                                 
Adjusted EBITDA
 
$
1,347
   
$
2,379
   
$
(1,032
)
   
-43.4
%
                                 
Net loss
 
$
(5,420
)
 
$
(567
)
 
$
(4,853
)
   
855.9
%
                                 
Net loss per common share - basic and diluted
 
$
(0.16
)
 
$
(0.03
)
 
$
(0.13
)
   
531.3
%
                                 
Net New Connections
   
32
     
14
     
18
     
129
%
                                 
Total Connections (at period end)
   
401
     
302
     
99
     
33
%
                                 
Total Number of Transactions
   
82,000
     
54,800
     
27,200
     
50
%
                                 
Transaction Volume
 
$
151,000
   
$
97,700
   
$
53,300
     
55
%
 
2

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results
 
“We are experiencing an inflection point in the unattended retail payments market with our cashless-payment solutions while achieving record revenue and integrating an acquisition,” said Stephen P. Herbert, USA Technologies’ chairman and chief executive officer. “With the introduction of our ePort Interactive Service, our most progressive solution to date, our customers now can leverage a content delivery platform to directly engage with their customers.  Additionally, the Premium Support Service continues to incentivize operators to move to cashless payments at 100% of their locations, which proliferates the acceptance of cashless payments in the self-service retail market.   We view the broadening adoption of cashless payment solutions, coupled with our continued growth, as validation that USAT is positioned as the clear leader in the self-service retail market.”

Fiscal 2016 Outlook

For full fiscal year 2016, management raised its expectations for connections and revenue, and it now expects to add between 93,000 and 95,000 net new connections for the year, bringing total connections to our service to a range of 426,000 to 428,000 and expects total revenue to be between $76 million and $78 million.  Additionally, the company anticipates that QuickStart will remain a popular program for customers, and management expects it to drive positive cash provided by operating activities in fiscal year 2016.  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 12, 2016.

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 # 2454754.

A live webcast of the conference call will be available at http://investor.usatech.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 12, 2016 until 11:59 p.m. Eastern Time on May 15, 2016 and may be accessed by calling (855) 859-2056 (domestic dial-in) or (404) 537-3406 (international dial-in) and reference conference ID # 2454754.  An archived replay of the conference call will also be available in the investor relations section of the company's website.
 
3

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results
 
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 Mobile™ for customers on the go, and QuickConnect, an API Web service for developers. USA Technologies has 78 United States and foreign patents in force; and has agreements with Verizon, Visa, Chase Paymentech and customers such as Compass, AMI Entertainment and others. 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; 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; whether USAT would be able to sell sufficient ePort hardware to third party leasing companies as part of the QuickStart program in order to continue to  increase cash flows from operations; whether USAT’s ongoing remediation of a material weakness that USAT identified in its internal controls over financial reporting, and which was reflected in our annual report on Form 10-K for the fiscal year ended June 30, 2015, would be effective; whether USAT experiences additional material weaknesses in its internal controls over financial reporting in the future, 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.
 
4

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results
 
Financial Schedules:

A. Comparative Income Statement For 9 Months Ended March 31, 2016 and March 31, 2015
B. Comparative Income Statement For 3 Months Ended March 31, 2016 and March 31, 2015
C. Five Quarter Select Key Performance Indicators
D. Comparative Condensed Balance Sheets March 31, 2016 to June 30, 2015
E. Five Quarter Statement of Operations and Adjusted EBITDA
F. Five Quarter Selling, General, & Administrative Expenses
G. Five Quarter Condensed Balance Sheet and Other Data
H. Five Quarter Condensed Statement of Cash Flows
I. Consolidated Statement of Shareholders’ Equity
J. Reconciliation of Net Earnings/(Loss) to Non-GAAP Net Income (Loss) and Net Earnings/(Loss) Per Common Share – Basic and Diluted to Non-GAAP Net Earnings/(Loss) Per Common Share – Basic and Diluted
 
NEW ACCOUNTING CLASSIFICATION

Commencing with the September 30, 2015 financial statements, the Company changed the manner in which it presents certain uncollected customer accounts receivable and the related allowance in its consolidated balance sheets and the related statements of cash flows. These accounts receivable represent a large number of small balance amounts due from customers for processing and service fees which had not been billed to customers, and as to which, there had been no customer transaction proceeds from which the Company could collect the amounts due in accordance with its normal procedures. The previous accounting classification recorded these amounts as a reduction of its accounts payable in the consolidated balance sheets and the related statements of cash flows. The new accounting classification moves these amounts to accounts receivable and allowance for bad debt.

Accordingly, the respective balances for all prior periods presented in these financial statements were reclassified in order to be consistent and comparable to the accounting treatment of these items in our March 31, 2016 financial statements. The new accounting classification as well as the reclassification for prior periods had no effect on the consolidated statements of operations or the consolidated statements of shareholders’ equity.
 
5

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results
 
(A) Comparative Income Statement For 9 Months Ended March 31, 2016 and March 31, 2015

($ in thousands, except share and per share data)
 
For the nine months ended March 31,
             
(unaudited)
 
2016
   
% of Sales
   
2015
   
% of Sales
   
Change
   
% Change
 
                                     
Revenues:
                                   
License and transaction fees
 
$
41,326
     
74.5
%
 
$
31,695
     
78.4
%
 
$
9,631
     
30.4
%
Equipment sales
   
14,138
     
25.5
%
   
8,736
     
21.6
%
   
5,402
     
61.8
%
Total revenues
   
55,464
     
100.0
%
   
40,431
     
100.0
%
   
15,033
     
37.2
%
                                                 
Costs of sales/revenues:
                                               
Cost of services
   
27,475
     
66.5
%
   
21,566
     
68.0
%
 
$
5,909
     
27.4
%
Cost of equipment
   
11,787
     
83.4
%
   
6,850
     
78.4
%
   
4,937
     
72.1
%
Total costs of sales/revenues
   
39,262
     
70.8
%
   
28,416
     
70.3
%
   
10,846
     
38.2
%
                                                 
Gross profit:
                                               
License and transaction fees
   
13,851
     
33.5
%
   
10,129
     
32.0
%
   
3,722
     
36.7
%
Equipment sales
   
2,351
     
16.6
%
   
1,886
     
21.6
%
   
465
     
24.7
%
Total gross profit
   
16,202
     
29.2
%
   
12,015
     
29.7
%
   
4,187
     
34.8
%
                                                 
Operating expenses:
                                               
Selling, general and administrative
   
15,652
     
28.2
%
   
11,444
     
28.3
%
 
$
4,208
     
36.8
%
Depreciation
   
439
     
0.8
%
   
456
     
1.1
%
   
(17
)
   
-3.7
%
Total operating expenses
   
16,091
     
29.0
%
   
11,900
     
29.4
%
   
4,191
     
35.2
%
Operating income
   
111
     
0.2
%
   
115
     
0.3
%
   
(4
)
   
-3.5
%
                                                 
Other income (expense):
                                               
Interest income
   
138
     
0.2
%
   
41
     
0.1
%
   
97
     
236.6
%
Interest expense
   
(403
)
   
-0.7
%
   
(209
)
   
-0.5
%
   
(194
)
   
92.8
%
Change in fair value of warrant liabilities
   
(5,692
)
   
-10.3
%
   
(656
)
   
-1.6
%
   
(5,036
)
   
767.7
%
Total other income (expense), net
   
(5,957
)
   
-10.7
%
   
(824
)
   
-2.0
%
   
(5,133
)
   
622.9
%
                                                 
Loss before provision for income taxes
   
(5,846
)
   
-10.5
%
   
(709
)
   
-1.8
%
   
(5,137
)
   
724.5
%
Benefit (provision) for income taxes
   
(88
)
           
(180
)
           
(92
)
   
51.1
%
                                                 
Net loss
   
(5,934
)
   
-10.7
%
   
(889
)
   
-2.2
%
   
(5,045
)
   
567.5
%
Cumulative preferred dividends
   
(668
)
   
-1.2
%
   
(668
)
   
-1.7
%
   
-
     
0.0
%
Net loss applicable to common shares
 
$
(6,602
)
   
-11.9
%
 
$
(1,557
)
   
-3.9
%
 
$
(5,045
)
   
324.0
%
Net loss per common share - basic and diluted
 
$
(0.18
)
         
$
(0.04
)
         
$
(0.14
)
   
321.0
%
Basic and diluted weighted average number of common shares outstanding
   
35,961,648
             
35,705,210
             
256,438
     
0.7
%
                                                 
Adjusted  EBITDA
 
$
5,358
     
9.7
%
 
$
5,007
     
12.4
%
 
$
351
     
7.0
%
                                                 
Non-GAAP net loss applicable to common shares
 
$
(25
)
   
0.0
%
 
$
(747
)
   
-1.8
%
 
$
722
     
0.0
%
                                                 
Total connections at period-end
   
401,000
             
302,000
                         
Net new connections in period
   
68,000
             
36,000
                         
 
6

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results
 
(B) Comparative Income Statement For 3 Months Ended March 31, 2016 and March 31, 2015

($ in thousands, except share and per share data)
 
For the three months ended March 31,
             
(unaudited)
 
2016
   
% of Sales
   
2015
   
% of Sales
   
Change
   
% Change
 
                                     
Revenues:
                                   
License and transaction fees
 
$
14,727
     
72.3
%
 
$
11,059
     
72.0
%
 
$
3,668
     
33.2
%
Equipment sales
   
5,634
     
27.7
%
   
4,298
     
28.0
%
   
1,336
     
31.1
%
Total revenues
   
20,361
     
100.0
%
   
15,357
     
100.0
%
   
5,004
     
32.6
%
                                                 
Costs of sales/revenues:
                                               
Cost of services
   
9,703
     
65.9
%
   
7,157
     
64.7
%
 
$
2,546
     
35.6
%
Cost of equipment
   
4,986
     
88.5
%
   
3,054
     
71.1
%
   
1,932
     
63.3
%
Total costs of sales/revenues
   
14,689
     
72.1
%
   
10,211
     
66.5
%
   
4,478
     
43.9
%
                                                 
Gross profit:
                                               
License and transaction fees
   
5,024
     
34.1
%
   
3,902
     
35.3
%
   
1,122
     
28.8
%
Equipment sales
   
648
     
11.5
%
   
1,244
     
28.9
%
   
(596
)
   
-47.9
%
Total gross profit
   
5,672
     
27.9
%
   
5,146
     
33.5
%
   
526
     
10.2
%
                                                 
Operating expenses:
                                               
Selling, general and administrative
   
6,094
     
29.9
%
   
4,281
     
27.9
%
 
$
1,813
     
42.3
%
Depreciation
   
173
     
0.8
%
   
135
     
0.9
%
   
38
     
28.1
%
Total operating expenses
   
6,267
     
30.8
%
   
4,416
     
28.8
%
   
1,851
     
41.9
%
Operating income (loss)
   
(595
)
   
-2.9
%
   
730
     
4.8
%
   
(1,325
)
   
-181.5
%
                                                 
Other income (expense):
                                               
Interest income
   
67
     
0.3
%
   
27
     
0.2
%
   
40
     
148.1
%
Interest expense
   
(180
)
   
-0.9
%
   
(85
)
   
-0.6
%
   
(95
)
   
111.8
%
Change in fair value of warrant liabilities
   
(4,805
)
   
-23.6
%
   
(1,101
)
   
-7.2
%
   
(3,704
)
   
336.4
%
Total other income (expense), net
   
(4,918
)
   
-24.2
%
   
(1,159
)
   
-7.5
%
   
(3,759
)
   
324.3
%
                                                 
Loss before provision for income taxes
   
(5,513
)
   
-27.1
%
   
(429
)
   
-2.8
%
   
(5,084
)
   
1185.1
%
Benefit (provision) for income taxes
   
93
             
(138
)
           
231
     
-167.4
%
                                                 
Net loss
   
(5,420
)
   
-26.6
%
   
(567
)
   
-3.7
%
   
(4,853
)
   
855.9
%
Cumulative preferred dividends
   
(334
)
   
-1.6
%
   
(334
)
   
-2.2
%
   
-
     
0.0
%
Net loss applicable to common shares
 
$
(5,754
)
   
-28.3
%
 
$
(901
)
   
-5.9
%
 
$
(4,853
)
   
538.6
%
Net loss per common share - basic and diluted
 
$
(0.16
)
         
$
(0.03
)
         
$
(0.13
)
   
531.3
%
Basic and diluted weighted average number of common shares outstanding
   
36,161,613
             
35,747,979
             
413,635
     
1.2
%
                                                 
Adjusted  EBITDA
 
$
1,347
     
6.6
%
 
$
2,379
     
15.5
%
 
$
(1,032
)
   
-43.4
%
                                                 
Non-GAAP net income (loss) applicable to common shares
 
$
(421
)
   
-2.1
%
 
$
321
     
2.1
%
 
$
(742
)
   
-231.2
%
                                                 
Total connections at period-end
   
401,000
             
302,000
                         
Net new connections in period
   
32,000
             
14,000
                         
 
7

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results
 
(C) Five Quarter Select Key Performance Indicators:

   
Three months ended
 
(unaudited)
 
March 31,
2016
   
December 31,
2015
   
September 30,
2015
   
June 30,
2015
   
March 31,
2015
 
Connections:
                             
Gross New Connections
   
38,000
     
24,000
     
20,000
     
34,000
     
24,000
 
% from Existing Customer Base
   
91
%
   
89
%
   
86
%
   
89
%
   
82
%
Net New Connections
   
32,000
     
20,000
     
16,000
     
31,000
     
14,000
 
Total Connections
   
401,000
     
369,000
     
349,000
     
333,000
     
302,000
 
                                         
Customers:
                                       
New Customers Added
   
200
     
350
     
675
     
675
     
475
 
Total Customers
   
10,825
     
10,625
     
10,275
     
9,600
     
8,925
 
                                         
Volumes:
                                       
Total Number of Transactions (millions)
   
82.0
     
76.0
     
68.8
     
62.2
     
54.8
 
Transaction Volume ($millions)
 
$
151.0
   
$
138.0
   
$
126.4
   
$
112.8
   
$
97.7
 
                                         
Financing Structure of Connections:
                                       
JumpStart
   
7.4
%
   
10.1
%
   
10.2
%
   
6.0
%
   
11.3
%
QuickStart & All Others *
   
92.6
%
   
89.9
%
   
89.8
%
   
94.0
%
   
88.7
%
Total
   
100.0
%
   
100.0
%
   
100.0
%
   
100.0
%
   
100.0
%

*Includes credit sales with standard trade receivable terms
 
8

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results
 
(D)
Comparative Condensed Balance Sheets March 31, 2016 to June 30, 2015

($ in thousands)
(unaudited)
   
March 31,
2016
   
June 30,
2015
   
$ Change
   
% Change
 
                           
Assets
                         
Current assets:
                         
Cash
   
$
14,901
   
$
11,374
   
$
3,527
     
31
%
Accounts receivable, less allowance
*
   
8,345
     
5,971
     
2,374
     
40
%
Finance receivables
     
1,677
     
941
     
736
     
78
%
Inventory
     
2,341
     
4,216
     
(1,875
)
   
-44
%
Deferred income taxes
     
1,276
     
1,258
     
18
     
1
%
Prepaid expenses and other current assets
     
1,060
     
574
     
486
     
85
%
Total current assets
     
29,600
     
24,334
     
5,266
     
22
%
                                   
Finance receivables, less current portion
     
3,042
     
3,698
     
(656
)
   
-18
%
Property and equipment, net
     
10,584
     
12,869
     
(2,285
)
   
-18
%
Goodwill and intangbiles
     
12,976
     
8,095
     
4,881
     
60
%
Deferred income taxes
     
25,701
     
25,788
     
(87
)
   
0
%
Other assets
     
337
     
350
     
(13
)
   
-4
%
Total assets
   
$
82,240
   
$
75,134
   
$
7,106
     
9
%
                                   
Liabilities and shareholders' equity
                                 
Current liabilities:
                                 
Accounts payable
*
 
$
12,029
   
$
10,542
   
$
1,487
     
14
%
Accrued expenses
     
3,339
     
2,108
     
1,231
     
58
%
Line of credit
     
6,980
     
4,000
     
2,980
     
75
%
Current obligations under long-term debt
     
625
     
478
     
147
     
31
%
Income taxes payable
     
-
     
54
     
(54
)
   
-100
%
Warrant liabilities
     
5,964
     
-
     
5,964
     
0
%
Deferred gain from sale-leaseback transactions
     
860
     
860
     
-
     
0
%
Total current liabilities
     
29,797
     
18,042
     
11,755
     
65
%
Long-term liabilities
                                 
Long-term debt, less current portion
     
1,742
     
1,854
     
(112
)
   
-6
%
Accrued expenses, less current portion
     
19
     
49
     
(30
)
   
-61
%
Warrant liabilities, less current portion
     
-
     
978
     
(978
)
   
-100
%
Deferred gain from sale-leaseback transactions, less current portion
     
255
     
900
     
(645
)
   
-72
%
Total long-term liabilities
     
2,016
     
3,781
     
(1,765
)
   
-47
%
Total liabilities
     
31,813
     
21,823
     
9,990
     
46
%
                                   
Shareholders' equity:
                                 
Preferred stock, no par value
     
3,138
     
3,138
     
-
     
0
%
Common stock, no par value
     
227,924
     
224,874
     
3,050
     
1
%
Accumulated deficit
     
(180,635
)
   
(174,701
)
   
(5,934
)
   
3
%
Total shareholders' equity
     
50,427
     
53,311
     
(2,884
)
   
-5
%
Total liabilities and shareholders' equity
   
$
82,240
   
$
75,134
   
$
7,106
     
9
%
                                   
Total current assets
   
$
29,600
   
$
24,334
   
$
5,266
     
22
%
Total current liabilities
     
29,797
     
18,042
     
11,755
     
65
%
Net working capital
   
$
(197
)
 
$
6,292
   
$
(6,489
)
   
-103
%
                                   
* Accounts receivable, net of allowance for doubtful accounts and accounts payable have increased by the following amounts due to reclassifications
   
$
-
   
$
1,299
                 
 
9

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results
 
(E)
Five Quarter Statement of Operations and Adjusted EBITDA

   
For the three months ended
 
(unaudited)
 
March 31,
2016
   
% of
Sales
   
December 31,
2015
   
% of
Sales
   
September 30,
2015
   
% of
Sales
   
June 30,
2015
   
% of
Sales
   
March 31,
2015
   
% of
Sales
 
Revenues:
                                                           
License and transaction fees
 
$
14,727
     
72.3
%
 
$
13,674
     
73.9
%
 
$
12,925
     
77.9
%
 
$
11,938
     
67.7
%
 
$
11,059
     
72.0
%
Equipment Sales
   
5,634
     
27.7
%
   
4,829
     
26.1
%
   
3,675
     
22.1
%
   
5,708
     
32.3
%
   
4,298
     
28.0
%
Total revenue
   
20,361
     
100.0
%
   
18,503
     
100.0
%
   
16,600
     
100.0
%
   
17,646
     
100.0
%
   
15,357
     
100.0
%
                                                                                 
Costs of sales/revenues:
                                                                               
License and transaction fees
   
9,703
     
65.9
%
   
9,067
     
66.3
%
   
8,705
     
67.4
%
   
7,863
     
65.9
%
   
7,157
     
64.7
%
Equipment sales
   
4,986
     
88.5
%
   
3,953
     
81.9
%
   
2,848
     
77.5
%
   
4,975
     
87.2
%
   
3,054
     
71.1
%
Total costs of sales/revenues
   
14,689
     
72.1
%
   
13,020
     
70.4
%
   
11,553
     
69.6
%
   
12,838
     
72.8
%
   
10,211
     
57.9
%
                                                                                 
Gross Profit:
                                                                               
License and transaction fees
   
5,024
     
34.1
%
   
4,607
     
33.7
%
   
4,220
     
32.6
%
   
4,075
     
34.1
%
   
3,902
     
35.3
%
Equipment sales
   
648
     
11.5
%
   
876
     
18.1
%
   
827
     
22.5
%
   
733
     
12.8
%
   
1,244
     
28.9
%
Total gross profit
   
5,672
     
27.9
%
   
5,483
     
29.6
%
   
5,047
     
30.4
%
   
4,808
     
27.2
%
   
5,146
     
33.5
%
                                                                                 
Operating expenses:
                                                                               
Selling, general and administrative
   
6,094
     
29.9
%
   
4,762
     
25.7
%
   
4,796
     
28.9
%
   
5,009
     
28.4
%
   
4,281
     
27.9
%
Depreciation
   
173
     
0.8
%
   
127
     
0.7
%
   
139
     
0.8
%
   
156
     
0.9
%
   
135
     
0.9
%
Total operating expenses
   
6,267
     
30.8
%
   
4,889
     
26.4
%
   
4,935
     
29.7
%
   
5,165
     
29.3
%
   
4,416
     
28.8
%
                                                                                 
Operating income (loss)
   
(595
)
   
-2.9
%
   
594
     
3.2
%
   
112
     
0.7
%
   
(357
)
   
-2.0
%
   
730
     
4.8
%
                                                                                 
Other income (expense):
                                                                               
Interest income
   
67
     
0.3
%
   
20
     
0.1
%
   
51
     
0.3
%
   
42
     
0.2
%
   
27
     
0.2
%
Other income
   
-
     
0.0
%
   
-
     
0.0
%
   
-
     
0.0
%
   
52
     
0.3
%
   
-
     
0.0
%
Interest expense
   
(180
)
   
-0.9
%
   
(104
)
   
-0.6
%
   
(119
)
   
-0.7
%
   
(92
)
   
-0.5
%
   
(85
)
   
-0.6
%
Change in fair value of warrant liabilities
   
(4,805
)
   
-23.6
%
   
(1,230
)
   
-6.6
%
   
343
     
2.1
%
   
263
     
1.5
%
   
(1,101
)
   
-7.2
%
Total other income (expense), net
   
(4,918
)
   
-24.2
%
   
(1,314
)
   
-7.1
%
   
275
     
1.7
%
   
265
     
1.5
%
   
(1,159
)
   
-7.5
%
                                                                                 
Income (loss) before provision for income taxes
   
(5,513
)
   
-27.1
%
   
(720
)
   
-3.9
%
   
387
     
2.3
%
   
(92
)
   
-0.5
%
   
(429
)
   
-2.8
%
Benefit (provision) for income taxes
   
93
     
0.5
%
   
(154
)
   
-0.8
%
   
(27
)
   
-0.2
%
   
(109
)
   
-0.6
%
   
(138
)
   
-0.9
%
                                                                                 
Net income (loss)
   
(5,420
)
   
-26.6
%
   
(874
)
   
-4.7
%
   
360
     
2.2
%
   
(201
)
   
-1.1
%
   
(567
)
   
-3.7
%
                                                                                 
Less interest income
   
(67
)
   
-0.3
%
   
(20
)
   
-0.1
%
   
(51
)
   
-0.3
%
   
(42
)
   
-0.2
%
   
(27
)
   
-0.2
%
Plus interest expenses
   
180
     
0.9
%
   
104
     
0.6
%
   
119
     
0.7
%
   
92
     
0.5
%
   
85
     
0.6
%
Plus income tax expense
   
(93
)
   
-0.5
%
   
154
     
0.8
%
   
27
     
0.2
%
   
109
     
0.6
%
   
138
     
0.9
%
Plus depreciation expense
   
1,190
     
5.8
%
   
1,323
     
7.2
%
   
1,350
     
8.1
%
   
1,381
     
7.8
%
   
1,433
     
9.3
%
Plus amortization expense
   
44
     
0.2
%
   
-
     
0.0
%
   
-
     
0.0
%
   
-
     
0.0
%
   
-
     
0.0
%
Plus (less) change in fair value of warrant liabilities
   
4,805
     
23.6
%
   
1,230
     
6.6
%
   
(343
)
   
-2.1
%
   
(263
)
   
-1.5
%
   
1,101
     
7.2
%
Plus stock-based compensation
   
142
     
0.7
%
   
237
     
1.3
%
   
272
     
1.6
%
   
175
     
1.0
%
   
216
     
1.4
%
Plus VendScreen non-recurring charges
   
461
     
2.3
%
   
106
     
0.6
%
   
17
     
0.1
%
   
-
     
0.0
%
   
-
     
0.0
%
Plus class action professional fees
   
105
     
0.5
%
   
-
     
0.0
%
   
-
     
0.0
%
   
-
     
0.0
%
   
-
     
0.0
%
Adjusted  EBITDA
 
$
1,347
     
6.6
%
 
$
2,260
     
12.2
%
 
$
1,751
     
10.6
%
 
$
1,251
     
7.1
%
 
$
2,379
     
15.5
%

See discussion of Non-GAAP financial measures later in this document
 
10

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results
 
(F)
Five Quarter Selling, General, & Administrative Expenses

   
Three months ended
 
($ in thousands)
(unaudited)
 
March 31,
2016
   
% of
SG&A
   
December 31,
2015
   
% of
SG&A
   
September 30,
2015
   
% of
SG&A
   
June 30,
2015
   
% of
SG&A
   
March 31,
2015
   
% of
SG&A
 
                                                             
Salaries and benefit costs
 
$
2,761
     
45.4
%
 
$
2,786
     
58.6
%
 
$
2,685
     
56.0
%
 
$
2,295
     
45.8
%
 
$
2,534
     
59.2
%
Marketing related expenses
   
362
     
5.9
%
   
335
     
7.0
%
   
333
     
6.9
%
   
580
     
11.6
%
   
184
     
4.3
%
Professional services
   
1,256
     
20.6
%
   
839
     
17.6
%
   
782
     
16.3
%
   
844
     
16.8
%
   
708
     
16.5
%
Bad debt expense
   
505
     
8.3
%
   
239
     
5.0
%
   
236
     
4.9
%
   
497
     
9.9
%
   
303
     
7.1
%
Premises, equipment and insurance costs
   
460
     
7.5
%
   
347
     
7.3
%
   
399
     
8.3
%
   
475
     
9.5
%
   
372
     
8.7
%
Research and development expenses
   
131
     
2.1
%
   
37
     
0.8
%
   
191
     
4.0
%
   
154
     
3.1
%
   
96
     
2.2
%
VendScreen non-recurring charges
   
461
     
7.6
%
   
106
     
2.2
%
   
17
     
0.4
%
   
-
     
0.0
%
   
-
     
0.0
%
Other expenses
   
158
     
2.6
%
   
73
     
1.5
%
   
153
     
3.2
%
   
164
     
3.3
%
   
84
     
2.0
%
Total SG&A expenses
 
$
6,094
     
100
%
 
$
4,762
     
100
%
 
$
4,796
     
100
%
 
$
5,009
     
100
%
 
$
4,281
     
100
%
                                                                                 
Total Revenue
   
20,361
             
18,503
             
16,600
             
17,646
             
15,357
         
SG&A expenses as a percentage of revenue
   
29.9
%
           
25.7
%
           
28.9
%
           
28.4
%
           
27.9
%
       
 
11

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results
 
(G)
Five Quarter Condensed Balance Sheet and Other Data
 
                     
($ in thousands)
(unaudited)
   
March 31,
2016
   
December 31,
2015
   
September 30,
2015
   
June 30,
2015
   
March 31,
2015