USA Technologies, Inc.
USA TECHNOLOGIES INC (Form: 8-K, Received: 05/08/2018 17:23:19)

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 8, 2018

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)

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
 


Item 2.02.
Results of Operations and Financial Condition

On May 8, 2018, USA Technologies, Inc. (the “Company”), issued a press release announcing its financial results for the third quarter ended March 31, 2018, a copy of which is furnished as Exhibit 99.1 to this report.
 
Item 9.01.
Financial Statements and Exhibits

Press Release of the Company dated May 8, 2018

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.

 
USA TECHNOLOGIES, INC.
     
Dated: May 8, 2018
By:
/s/ Stephen P. Herbert
   
Stephen P. Herbert,
   
Chairman and Chief Executive Officer
 
 


Exhibit 99.1
 

USA Technologies Announces Third Quarter Fiscal Year 2018 Results
Achieved Year-Over-Year Revenue Growth of 35%

MALVERN, Pa. May 8, 2018 – 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, 2018.

Third Quarter Financial Highlights:

Revenue of $35.8 million, increased 35% year-over-year, marking the 34 th consecutive quarter of growth

On a pro-forma basis, as if the acquisition of Cantaloupe had occurred on July 1, 2016, overall revenue increased 12% year-over-year and License and transaction fee revenue increased 25% year-over-year

New net connections of 64,000 bring total connections to 969,000

License and transaction fee revenue of $27.0 million, an increase of 55% year-over-year

Gross margins of 33.3% increased from 25.0% in third quarter of fiscal year 2017

License and transaction margin of 40.7% increased from 32.0% in third quarter of fiscal year 2017
 
Operating loss of $(0.5) million

Adjusted operating income (non-GAAP) of $2.0 million

Net income of $1.2 million, or $0.02 per share

Non-GAAP net income of $2.2 million, or $0.04 per share

Adjusted EBITDA of $4.3 million, an increase of 130% year-over-year

Ended the quarter with $17.1 million in cash
 

“Our third fiscal quarter results demonstrate the successful integration of Cantaloupe, including additional cross-selling wins, improved operational efficiencies, as well as revenue and margin expansion across our business,” said Stephen P. Herbert, USA Technologies’ Chairman and Chief Executive Officer.  “Our commercial success in cross-selling our combined offering is allowing us to reach new customers, displace competitive solutions, as well as expand our footprint within our existing customer base. Additionally, subsequent to quarter end, we announced a new three-year strategic agreement with Ingenico. We are thrilled to strengthen our relationship with Ingenico via this strategic alliance, which we believe will help expand our reach in North America, as well our global presence into agreed upon markets, ultimately positioning us to gain additional penetration and market share in the global unattended retail market.”

“We are pleased to have exceeded the long-term margin targets relating to our gross margins, license and transaction fees, and equipment revenues that we set  less than six months ago,” said Priyanka Singh, USA Technologies’ Chief Financial Officer.  “Our third quarter L&T margin was the highest we have seen in the past 5 years, reflecting our commitment to driving L&T margin expansion. Additionally, certain actions made in connection with our integration of Cantaloupe have resulted in approximately $3 million in annualized cost savings.”

Fiscal Year 2018 Outlook
 
For full fiscal year 2018, the company expects revenue to be between $138 million to $142 million and adjusted EBITDA to be between $14.5 million and $15.0 million. USAT expects total connections to its service as of the end of the fiscal year to be in the 1.03 million to 1.07 million range.  USAT continues to expect the Cantaloupe transaction to be accretive in fiscal 2018, net of one-time transaction and integration expenses and any purchase accounting adjustments.

USA Technologies has not reconciled the company’s adjusted EBITDA outlook to GAAP net income (loss) due to the uncertainty and potential variability of the provision for (benefit from) income taxes, and integration and acquisition costs, each of which is a reconciling item between adjusted EBITDA and GAAP net income (loss). Because these items are uncertain, depend on various factors, cannot be reasonably predicted, and could have a significant impact on the calculation of GAAP net income (loss), USA Technologies has not provided guidance for GAAP net income (loss) or a reconciliation of the company’s adjusted EBITDA outlook to GAAP net income (loss). Accordingly, a GAAP net income (loss) outlook and a reconciliation of adjusted EBITDA outlook to GAAP net income (loss) is not available without unreasonable effort. For information regarding the reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see "Discussion of Non-GAAP Financial Measures" below and the reconciliation tables included in this press release under “Financial Schedules”.

Webcast and Conference Call

USA Technologies will host a conference call and webcast the event beginning at 8:30 a.m. Eastern Time today, May 8, 2018.
 

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 # 5974998 .

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 8, 2018 until 11:30 a.m. Eastern Time on May 11, 2018 and may be accessed by calling (855) 859-2056 (domestic dial-in) or (404) 537-3406 (international dial-in) and reference conference ID # 5974998.  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 Mobile™ for customers on the go, ePort® Interactive, and QuickConnect, an API Web service for developers. Through its recent acquisition of Cantaloupe, the company also offers logistics, dynamic route scheduling, automated pre-kitting, responsive merchandising, inventory management, warehouse and accounting management solutions. Cantaloupe is a premier provider of cloud and mobile solutions for vending, micro markets, and office coffee services. USA Technologies and Cantaloupe have 86 United States and foreign patents in force; and have agreements with Verizon, Visa , Chase Paymentech, Ingenico, and customers such as Compass, AMI Entertainment and others. For more information, please visit the website at www.usatech.com .

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 (Generally Accepted Accounting Principles). Reconciliations between non-GAAP financial measures and the most comparable GAAP financial measures are set forth below in Financial Schedule E.

The following non-GAAP financial measures are discussed herein: adjusted EBITDA, adjusted operating income, non-GAAP net income (loss), and non-GAAP net income (loss) per share. The presentation of these additional financial measures is not intended to be considered in isolation from, superior to, as a substitute for, or as a measure of, the financial measures prepared and presented in accordance with GAAP, including the net income or net loss of USAT, net cash provided/used by operating activities, profitability or net earnings. 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 below in Financial Schedule E 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, 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 Cantaloupe during the current fiscal year and VendScreen, Inc. (“VendScreen”) during the prior fiscal year, and non-cash expenses for equity awards under our equity incentive plans. Non-GAAP income (loss) per common share is calculated by dividing non-GAAP net income (loss) by the weighted average number of common shares outstanding. Management believes that non-GAAP net income (loss) and non-GAAP net income (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 these non-GAAP financial measures serve 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 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 loss before interest income, interest expense, income tax provision (benefit), depreciation, amortization, non-recurring fees and charges that were incurred in connection with the acquisition and integration of Cantaloupe during the current fiscal year and VendScreen during the prior fiscal year, 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 acquisition of Cantaloupe during the current fiscal year and VendScreen during the prior fiscal year in order to allow more accurate comparison of the financial results to historical operations.  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.
 

As used herein, adjusted operating income represents operating income before   the non-recurring costs and expenses incurred in connection with the acquisition of Cantaloupe during the current fiscal year and VendScreen during the prior fiscal year, and the amortization expenses related to our acquisition-related intangibles.  We have excluded these non-recurring costs and expenses in order to allow more accurate comparison of the financial results to historical operations and we believe such a comparison is useful to investors as a measure of comparative operating performance.  

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; whether our alliance agreement with Ingenico Inc. would result in expansion of our global presence as each of USAT and Ingenico would have to agree upon any such expansion; 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, route scheduling, inventory management, 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 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 effect that the integration  of Cantaloupe into USAT’s business will have on USAT’s forecasted revenues, connections,  or adjusted EBITDA for fiscal year 2018; the possibility that all or a portion of the expected benefits and efficiencies from the combined offering of the services of USAT and Cantaloupe, including increases in revenue, business efficiencies and competitiveness, and decrease in operational costs, will not continue to be realized or would not be realized within the expected time period; and whether USAT's existing or anticipated customers purchase, rent or utilize ePort or Seed 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, 2018 and March 31, 2017
B.
Five Quarter Select Key Performance Indicators
C.
Balance Sheets at March 31, 2018 and at June 30, 2017
D.
Statements of Cash Flows for the 9 Months Ended March 31, 2018 and March 31, 2017
E.
Reconciliation of GAAP to Non-GAAP Financial Measures for the 3 Months and 9 Months Ended March 31, 2018 and March 31, 2017
 

(A)
Statements of Operations for the 3 Months and 9 Months Ended March 31, 2018 and March 31, 2017

   
Three months ended March 31,
 
Nine months ended March 31,
($ in thousands, except shares and per share data)
 
2018
 
2017
 
% Change
 
2018
 
2017
 
% Change
Revenues:
                                   
License and transaction fees
 
$
27,020
   
$
17,459
     
54.8
%
 
$
69,817
   
$
50,463
     
38.4
%
Equipment sales
   
8,812
     
9,001
     
(2.1
%)
   
24,138
     
19,341
     
24.8
%
Total revenues
   
35,832
     
26,460
     
35.4
%
   
93,955
     
69,804
     
34.6
%
                                                 
Costs of sales/revenues:
                                               
Cost of services
   
16,012
     
11,876
     
34.8
%
   
43,700
     
34,508
     
26.6
%
Cost of equipment
   
7,876
     
7,959
     
(1.0
%)
   
21,909
     
16,170
     
35.5
%
Total costs of sales/revenues
   
23,888
     
19,835
     
20.4
%
   
65,609
     
50,678
     
29.5
%
                                                 
Gross profit:
                                               
License and transaction gross profit
   
11,008
     
5,583
     
97.2
%
   
26,117
     
15,955
     
63.7
%
Equipment gross profit
   
936
     
1,042
     
(10.2
%)
   
2,229
     
3,171
     
(29.7
%)
Total gross profit
   
11,944
     
6,625
     
80.3
%
   
28,346
     
19,126
     
48.2
%
                                                 
Gross margin (as a percentage):
                                               
License and transaction fees
   
40.7
%
   
32.0
%
   
8.8
%
   
37.4
%
   
31.6
%
   
5.8
%
Equipment sales
   
10.6
%
   
11.6
%
   
(1.0
%)
   
9.2
%
   
16.4
%
   
(7.2
%)
Total gross margin
   
33.3
%
   
25.0
%
   
8.3
%
   
30.2
%
   
27.4
%
   
2.8
%
                                                 
Operating expenses:
                                               
Selling, general and administrative
   
9,572
     
5,947
     
61.0
%
   
24,647
     
18,540
     
32.9
%
Integration and acquisition costs
   
1,747
     
     
100.0
%
   
5,844
     
109
     
5,261.5
%
Depreciation and amortization
   
1,125
     
259
     
334.4
%
   
2,107
     
774
     
172.2
%
Total operating expenses
   
12,444
     
6,206
     
100.5
%
   
32,598
     
19,423
     
67.8
%
                                                 
Operating (loss) income
   
(500
)
   
419
     
(219.3
%)
   
(4,252
)
   
(297
)
   
1,331.6
%
                                                 
Other income (expense):
                                               
Interest income
   
134
     
114
     
17.5
%
   
465
     
387
     
20.2
%
Interest expense
   
(612
)
   
(188
)
   
225.5
%
   
(1,315
)
   
(601
)
   
118.8
%
Change in fair value of warrant liabilities
   
     
     
     
     
(1,490
)
   
(100.0
%)
Total other expense, net
   
(478
)
   
(74
)
   
545.9
%
   
(850
)
   
(1,704
)
   
(50.1
%)
                                                 
(Loss) income before income taxes
   
(978
)
   
345
     
(383.5
%)
   
(5,102
)
   
(2,001
)
   
155.0
%
Benefit (provision) for income taxes
   
2,138
     
(209
)
   
(1,123.0
%)
   
(6,467
)
   
(94
)
   
6,779.8
%
                                                 
Net income (loss)
   
1,160
     
136
     
752.9
%
   
(11,569
)
   
(2,095
)
   
452.2
%
Cumulative preferred dividends
   
(334
)
   
(334
)
   
     
(668
)
   
(668
)
   
 
Net income (loss) applicable to common shares
 
$
826
   
$
(198
)
   
(517.2
%)
 
$
(12,237
)
 
$
(2,763
)
   
342.9
%
Net income (loss) per common share:
                                               
Basic
 
$
0.02
   
$
(0.00
)
   
(413.7
%)
 
$
(0.24
)
 
$
(0.07
)
   
244.1
%
Diluted
 
$
0.02
   
$
(0.00
)
   
(409.6
%)
 
$
(0.24
)
 
$
(0.07
)
   
244.1
%
Weighted average number of common shares outstanding:
                                               
Basic
   
53,637,085
     
40,327,697
     
33.0
%
   
51,101,813
     
39,703,690
     
28.7
%
Diluted
   
54,338,126
     
40,327,697
     
34.7
%
   
51,101,813
     
39,703,690
     
28.7
%
 

(B)
Five Quarter Select Key Performance Indicators

   
As of and for the three months ended
($ in thousand)
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
Connections:
                             
Gross New connections
   
75,000
     
317,000
     
28,000
     
70,000
     
40,000
 
% from existing customer base
   
92
%
   
44
%
   
82
%
   
93
%
   
88
%
Net New connections *
   
64,000
     
311,000
     
26,000
     
64,000
     
35,000
 
Total connections
   
969,000
     
905,000
     
594,000
     
568,000
     
504,000
 
                                         
Customers:
                                       
New customers added *
   
550
     
1,800
     
550
     
300
     
500
 
Total customers
   
15,600
     
15,050
     
13,250
     
12,700
     
12,400
 
                                         
Volumes:
                                       
Total number of transactions (millions)
   
170.6
     
144.8
     
121.1
     
114.8
     
104.9
 
Transaction volume (millions)
 
$
318.0
   
$
272.7
   
$
239.2
   
$
225.6
   
$
202.5
 
                                         
Financing structure of new connections:
                                       
JumpStart
   
1.2
%
   
0.4
%
   
4.1
%
   
3.3
%
   
8.6
%
QuickStart & All Others **
   
98.8
%
   
99.6
%
   
95.9
%
   
96.7
%
   
91.4
%
Total
   
100.0
%
   
100.0
%
   
100.0
%
   
100.0
%
   
100.0
%

* Three months ending December 31, 2017 includes new net connections and new customers related to the acquisition of Cantaloupe of approximately 270,000 and 1,400, respectively.
** Includes credit sales with standard trade receivable terms.
 

(C)
Balance Sheets at March 31, 2018 and at June 30, 2017

($ in thousands, except shares)
 
March 31,
2018
 
June 30,
2017
             
Assets
           
Current assets:
           
Cash and cash equivalents
 
$
17,107
   
$
12,745
 
Accounts receivable, less allowance of $2,446 and $3,149, respectively
   
23,166
     
7,193
 
Finance receivables, less allowance of $42 and $19, respectively
   
3,904
     
11,010
 
Inventory
   
11,030
     
4,586
 
Prepaid expenses and other current assets
   
1,869
     
968
 
Total current assets
   
57,076
     
36,502
 
                 
Non-current assets:
               
Finance receivables, less current portion
   
9,679
     
8,607
 
Other assets
   
1,214
     
687
 
Property and equipment, net
   
12,198
     
12,111
 
Deferred income taxes
   
16,911
     
27,670
 
Intangibles, net
   
30,119
     
622
 
Goodwill
   
64,196
     
11,492
 
Total non-current assets
   
134,317
     
61,189
 
                 
Total assets
 
$
191,393
   
$
97,691
 
                 
Liabilities and shareholders’ equity
               
Current liabilities:
               
Accounts payable
 
$
29,446
   
$
16,054
 
Accrued expenses
   
7,961
     
4,140
 
Line of Credit, net
   
     
7,036
 
Capital lease obligations and current obligations under long-term debt
   
4,475
     
3,230
 
Deferred revenue
   
441
     
 
Deferred gain from sale-leaseback transactions
   
198
     
239
 
Total current liabilities
   
42,521
     
30,699
 
                 
Long-term liabilities:
               
Revolving Credit Facility
   
10,000
     
 
Capital lease obligations and long-term debt, less current portion
   
22,895
     
1,061
 
Accrued expenses, less current portion
   
66
     
53
 
Deferred gain from sale-leaseback transactions, less current portion
   
     
100
 
Total long-term liabilities
   
32,961
     
1,214
 
                 
Total liabilities
 
$
75,482
   
$
31,913
 
                 
Shareholders’ equity:
               
Preferred stock, no par value, 1,800,000 shares authorized, no shares issued
   
     
 
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preferences of $19,443 and $18,775 at March 31, 2018 and June 30, 2017, respectively
   
3,138
     
3,138
 
Common stock, no par value, 640,000,000 shares authorized, 53,666,718   and 40,331,645 shares issued and outstanding at March 31, 2018 and June 30, 2017, respectively
   
307,634
     
245,999
 
Accumulated deficit
   
(194,861
)
   
(183,359
)
Total shareholders’ equity
   
115,911
     
65,778
 
Total liabilities and shareholders’ equity
 
$
191,393
   
$
97,691
 
 

(D)
Statements of Cash Flows for the 9 Months Ended March 31, 2018 and March 31, 2017

 
 
Nine months ended March 31,
($ in thousands)
 
2018
 
2017
OPERATING ACTIVITIES:
           
Net loss
 
$
(11,569
)
 
$
(2,095
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
               
Non-cash stock based compensation
   
2,005
     
678
 
Gain on disposal of property and equipment
   
(112
)
   
(59
)
Non-cash interest and amortization of debt discount
   
100
     
98
 
Bad debt expense
   
506
     
577
 
Depreciation and amortization
   
5,858
     
3,774
 
Change in fair value of warrant liabilities
   
     
1,490
 
Excess tax benefits
   
67
     
 
Deferred income taxes, net
   
6,400
     
94
 
Deferred revenue
   
(185
)
   
 
Recognition of deferred gain from sale-leaseback transactions
   
(143
)
   
(646
)
Changes in operating assets and liabilities:
               
Accounts receivable
   
(12,972
)
   
(2,388
)
Finance receivables
   
11,114
     
(2,113
)
Inventory
   
(5,624
)
   
(2,042
)
Prepaid expenses and other current assets
   
(564
)
   
(406
)
Accounts payable and accrued expenses
   
13,808
     
(1,257
)
Net cash provided by (used in) operating activities
   
8,689
     
(4,295
)
 
               
INVESTING ACTIVITIES:
               
Purchase of property and equipment, including rentals
   
(3,005
)
   
(2,818
)
Proceeds from sale of property and equipment, including rentals
   
253
     
105
 
Cash paid for assets acquired from Cantaloupe
   
(65,182
)
   
 
Net cash used in investing activities
   
(67,934
)
   
(2,713
)
 
               
FINANCING ACTIVITIES:
               
Payment of debt issuance costs
   
(445
)
   
(90
)
Issuance of common stock in public offering, net
   
39,888
     
 
Proceeds from issuance of long-term debt
   
25,100
     
 
Proceeds from Revolving Credit Facility
   
12,500
     
 
Repayment of Revolving Credit Facility
   
(2,500
)
   
 
Repayment of Line of Credit, net
   
(7,111
)
   
 
Repayment of capital lease obligations and long-term debt
   
(3,778
)
   
(556
)
Cash used in retirement of common stock
   
(156
)
   
(31
)
Proceeds from exercise of common stock options
   
109
     
 
Proceeds from exercise of common stock warrants
   
     
6,193
 
Net cash provided by financing activities
   
63,607
     
5,516
 
 
               
Net increase (decrease) in cash and cash equivalents
   
4,362
     
(1,492
)
Cash and cash equivalents at beginning of year
   
12,745
     
19,272
 
Cash and cash equivalents at end of period
 
$
17,107
   
$
17,780
 
 
               
Supplemental disclosures of cash flow information:
               
Interest paid in cash
 
$
1,153
   
$
528
 
Income taxes paid in cash (refund), net
 
$
   
$
 
Supplemental disclosures of noncash financing and investing activities:
               
Equity issued in connection with Cantaloupe Acquisition
 
$
19,789
   
$
 
Equipment and software acquired under capital lease
 
$
227
   
$
326
 
 

(E)
Reconciliation of GAAP to Non-GAAP Financial Measures for the 3 Months and 9 Months Ended March 31, 2018 and March 31, 2017

Reconciliation of Net Income (Loss) to Adjusted EBITDA:

 
 
Three months ended March 31,
 
Nine months ended March 31,
($ in thousand)
 
2018
 
2017
 
% Change
 
2018
 
2017
 
% Change
Net income (loss)
 
$
1,160
   
$
136
     
752.9
%
 
$
(11,569
)
 
$
(2,095
)
   
452.2
%
Less interest income
   
(134
)
   
(114
)
   
17.5
%
   
(465
)
   
(387
)
   
20.2
%
Plus interest expense
   
612
     
188
     
225.5
%
   
1,315
     
601
     
118.8
%
Plus income tax (benefit) provision
   
(2,138
)
   
209
     
(1,123.0
%)
   
6,467
     
94
     
6,779.8
%
Plus depreciation expense
   
1,581
     
1,165
     
35.7
%
   
4,541
     
3,642
     
24.7
%
Plus amortization expense
   
801
     
45
     
1,680.0
%
   
1,317
     
132
     
897.7
%
EBITDA
 
$
1,882
   
$
1,629
     
15.5
%
 
$
1,606
   
$
1,987
     
(19.2
%)
 
                                               
Plus loss on fair value of warrant liabilities
   
     
     
     
     
1,490
     
(100.0
%)
Plus stock-based compensation
   
649
     
233
     
178.5
%
   
2,005
     
678
     
195.7
%
Plus litigation related professional fees
   
     
     
     
     
33
     
(100.0
%)
Plus integration and acquisition costs
   
1,747
     
     
100.0
%
   
5,844
     
109
     
5,261.5
%
Adjustments to EBITDA
   
2,396
     
233
     
928.3
%
   
7,849
     
2,310
     
239.8
%
Adjusted EBITDA
 
$
4,278
   
$
1,862
     
129.8
%
 
$
9,455
   
$
4,297
     
120.0
%
 
Reconciliation of Operating (Loss) Income to Adjusted Operating Income (Loss):
 
 
 
Three months ended March 31,
 
Nine months ended March 31,
($ in thousand)
  2018   2017  
% Change
  2018   2017  
% Change
Operating (loss) income
 
$
(500
)
 
$
419
     
(219.3
%)
 
$
(4,252
)
 
$
(297
)
   
1,331.6
%
Plus amortization expense
   
801
     
45
     
1,680.0
%
   
1,317
     
132
     
897.7
%
Plus integration and acquisition costs
   
1,747
     
     
100.0
%
   
5,844
     
109
     
5,261.5
%
Adjusted operating income (loss)
 
$
2,048
   
$
464
     
341.4
%
 
$
2,909
   
$
(56
)
   
(5,294.6
%)

Reconciliation of Net Income (Loss) to Non-GAAP Net Income:

 
 
Three months ended March 31,
 
Nine months ended March 31,
($ in thousands, except shares and per share data)
 
2018
 
2017
 
% Change
 
2018
 
2017
 
% Change
Net income (loss)
 
$
1,160
   
$
136
     
752.9
%
 
$
(11,569
)
 
$
(2,095
)
   
452.2
%
Non-GAAP adjustments:
                                               
Loss on fair value of warrant liabilities
   
     
     
     
     
1,490
     
(100.0
%)
Non-cash portion of income tax (benefit) provision
   
(2,138
)
   
209
     
(1,123.0
%)
   
6,467
     
94
     
6,779.8
%
Amortization of intangible assets acquired
   
801
     
45
     
1,680.0
%
   
1,317
     
132
     
897.7
%
Stock-based compensation
   
649
     
233
     
178.5
%
   
2,005
     
678
     
195.7
%
Litigation related professional fees
   
     
     
     
     
33
     
(100.0
%)
Integration and acquisition costs
   
1,747
     
     
100.0
%
   
5,844
     
109
     
5,261.5
%
Non-GAAP net income
 
$
2,219
   
$
623
     
256.2
%
 
$
4,064
   
$
441
     
821.5
%
 
                                               
Non-GAAP net income per common share:
                                               
Basic
 
$
0.04
   
$
0.02
     
167.8
%
 
$
0.08
   
$
0.01
     
616.0
%
Diluted
 
$
0.04
   
$
0.02
     
166.9
%
 
$
0.08
   
$
0.01
     
619.8
%
 
                                               
Weighted average number of common shares outstanding:
                                               
Basic
   
53,637,085
     
40,327,697
     
33.0
%
   
51,101,813
     
39,703,690
     
28.7
%
Diluted
   
54,338,126
     
40,721,319
     
33.4
%
   
51,723,241
     
40,402,502
     
28.0
%


Monica Gould
The Blueshirt Group
Tel: +1 212-871-3927
monica@blueshirtgroup.com

Lindsay Savarese
The Blueshirt Group
Tel: +1 212-331-8417
lindsay@blueshirtgroup.com

Source: USA Technologies, Inc.
F-USAT