CANTALOUPE, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - USA TECHNOLOGIES INC 8-K 5-12-2016 - CANTALOUPE, INC.	form8k.htm

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	%

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.

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.

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results

Financial Schedules:

Comparative Income Statement For 9 Months Ended March 31, 2016 and March 31, 2015

Comparative Income Statement For 3 Months Ended March 31, 2016 and March 31, 2015

Five Quarter Select Key Performance Indicators

Comparative Condensed Balance Sheets March 31, 2016 to June 30, 2015

Five Quarter Statement of Operations and Adjusted EBITDA

Five Quarter Selling, General, & Administrative Expenses

Five Quarter Condensed Balance Sheet and Other Data

Five Quarter Condensed Statement of Cash Flows

Consolidated Statement of Shareholders’ Equity

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.

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

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

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

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

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

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	%

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

Assets
Current assets:
Cash		$	14,901		$	14,809	$	11,592	$	11,374	$	8,475
Accounts receivable, less allowance	*		8,345			6,976		6,448		5,971		5,245
Finance receivables			1,677			1,503		946		941		750
Inventory			2,341			2,849		3,718		4,216		4,241
Other current assets			2,336			2,160		1,883		1,832		1,322
Total current assets			29,600			28,297		24,587		24,334		20,033

Finance receivables, less current portion			3,042			2,435		3,525		3,698		3,505
Other assets			337			326		342		350		423
Property and equipment, net			10,584			10,856		11,890		12,869		13,574
Deferred income taxes			25,701			25,607		25,761		25,788		26,169
Goodwill and intangibles			12,976			8,095		8,095		8,095		8,095
Total assets		$	82,240		$	75,616	$	74,200	$	75,134	$	71,799

Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued expenses	*	$	15,368		$	9,992	$	11,615	$	12,650	$	9,044
Line of credit			6,980			7,000		4,000		4,000		4,000
Warrant Liabilities			5,964			-		-		-		-
Other current liabilities			1,485			1,384		1,497		1,392		1,294
Total current liabilities			29,797			18,376		17,112		18,042		14,338
Long-term liabilities
Total long-term liabilities			2,016			3,945		3,116		3,781		4,134
Total liabilities			31,813			22,321		20,228		21,823		18,472

Shareholders' equity:
Total shareholders' equity			50,427			53,295		53,972		53,311		53,327
Total liabilities and shareholders' equity		$	82,240		$	75,616	$	74,200	$	75,134	$	71,799

Total current assets		$	29,600		$	28,297	$	24,587	$	24,334	$	20,033
Total current liabilities			29,797			18,376		17,112		18,042		14,338
Net working capital		$	(197	)	$	9,921	$	7,475	$	6,292	$	5,695

* Accounts receivable, net of allowance for doubtful accounts and accounts payable have increased by the following amounts due to reclassifications		$	-		$	-	$	-	$	1,299	$	1,842

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results

(H)	Five Quarter Condensed Statement of Cash Flows

		Three months ended
		March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015
($ in thousands) (unaudited)

OPERATING ACTIVITIES:
Net income (loss)		$	(5,420	)	$	(874	)	$	360		$	(201	)	$	(567	)
Adjustments to reconcile net income (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			142			237			272			175			216
Gain on disposal of property and equipment			(15	)		(41	)		(1	)		(4	)		(6	)
Bad debt expense			506			238			236			497			302
Depreciation			1,190			1,323			1,350			1,381			1,433
Amortization of intangible assets			44			-			-			-			-
Change in fair value of warrant liabilities			4,805			1,230			(343	)		(263	)		1,101
Deferred income taxes, net			(93	)		154			27			31			121
Gain on sale of finance receivables			-			-			-			(52	)		-
Recognition of deferred gain from sale-leaseback transactions			(215	)		(215	)		(215	)		(215	)		(216	)
Changes in operating assets and liabilities:
Accounts receivable	*		(1,872	)		(767	)		(713	)		(1,223	)		(984	)
Finance receivables			(154	)		533			168			(332	)		(2,248	)
Inventory			250			649			219			(639	)		651
Prepaid expenses and other assets			(160	)		(254	)		48			(97	)		152
Accounts payable	*		4,154			(1,623	)		(1,044	)		3,491			(141	)
Accrued expenses			1,166			(13	)		(2	)		93			234
Income taxes payable			-			(70	)		-			37			17
Net change in operating assets and liabilities			3,384			(1,545	)		(1,324	)		1,330			(2,319	)

Net cash provided by operating activities			4,328			507			362			2,680			65

INVESTING ACTIVITIES:
Purchase and additions of property and equipment			(164	)		(33	)		(49	)		(6	)		(4	)
Proceeds from sale of property and equipment			19			101			4			8			19
Cash paid for assets acquired from VendScreen			(5,625	)		-			-			-			-

Net cash provided by (used in) investing activities			(5,770	)		68			(45	)		2			15

FINANCING ACTIVITIES:
Cash used for the retirement of common stock			-			(40	)		-			-			-
Proceeds from exercise of common stock warrants			1,652			-			29			-			-
Excess tax benefits from share-based compensation			-			-			-			10			-
Proceeds (payments) from line of credit			33			3,000			-			-			-
Proceeds from long-term debt			-			-			-			304			1,753
Repayment of long-term debt			(151	)		(233	)		(128	)		(97	)		(93	)

Net cash provided by (used in) financing activities			1,534			2,727			(99	)		217			1,660

Net increase in cash			92			3,217			218			2,899			1,741

Cash at beginning of period			14,809			11,592			11,374			8,475			6,734

Cash at end of period		$	14,901		$	14,809		$	11,592		$	11,374		$	8,475

Supplemental disclosures of cash flow information:
Interest paid in cash		$	191		$	107		$	106		$	99		$	67
Depreciation expense allocated to cost of services		$	1,051		$	1,186		$	1,199		$	1,179		$	1,271
Reclass of rental program property to inventory, net		$	347		$	777		$	(279	)	$	(718	)	$	1,374
Prepaid items financed with debt		$	-		$	-		$	103		$	-		$	-
Equipment and software acquired under capital lease		$	409		$	-		$	35		$	-		$	-
Disposal of property and equipment		$	189		$	238		$	99		$	447		$	343
Fair value of common stock warrants at issuance		$	52		$	-		$	-		$	-		$	-
Proceeds from debt for debt financing costs		$	79		$	-		$	-		$	-		$	-

* Accounts Receivable
Reclassification of cash provided by and included in accounts payable to accounts receivable		$	-		$	-		$	-		$	543		$	(10	)

* Accounts Payable
Reclassification of cash provided by and included in accounts payable to accounts receivable		$	-		$	-		$	-		$	(543	)	$	10

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results

(I)	Consolidated Statement of Shareholders’ Equity

	Series A Convertible Preferred Stock				Common Stock						Accumulated
($ in thousands, except shares)	Shares		Amount		Shares			Amount			Deficit			Total

Balance, June 30, 2015, as previously reported		442,968	$	3,138		35,747,242		$	224,874		$	(174,701	)	$	53,311
Adjustments		2,095		-		16,421			-			-			-
Balance, June 30, 2015, as adjusted		445,063	$	3,138		35,763,663		$	224,874		$	(174,701	)	$	53,311

Warrants issued in conjunction with Line of Credit Agreement		-		-		-			52			-			52
Reclass of fair value of warranty liability upon exercise of warrants						-			706						706
Exercise of warrants		-		-		645,100			1,681			-			1,681
Stock based compensation
2013 Stock Incentive Plan		-		-		169,913			377			-			377
2014 Stock Option Incentive Plan		-		-		12,785			274			-			274
Retirement of common stock		-		-		(12,746	)		(40	)		-			(40	)
Net loss		-		-		-			-			(5,934	)		(5,934	)

Balance, March 31, 2016		445,063	$	3,138		36,578,715		$	227,924		$	(180,635	)	$	50,427

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results

(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

	Three months ended
($ in thousands) (unaudited)	March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			March 31, 2015

Net income (loss)	$	(5,420	)	$	(874	)	$	360		$	(201	)	$	(567	)
Non-GAAP adjustments:
Non-cash portion of income tax provision		(38	)		224			27			72			121
Fair value of warrant adjustment		4,805			1,230			(343	)		(263	)		1,101
Non-recurring charges		461			106			-			-			-
Class action professional fees		105			-			-			-			-
Non-GAAP net income (loss)	$	(87	)	$	686		$	44		$	(392	)	$	655

Net income (loss)	$	(5,420	)	$	(874	)	$	360		$	(201	)	$	(567	)
Cumulative preferred dividends		(334	)		-			(334	)		-			(334	)
Net income (loss) applicable to common shares	$	(5,754	)	$	(874	)	$	26		$	(201	)	$	(901	)

Non-GAAP net income (loss)	$	(87	)	$	686		$	44		$	(392	)	$	655
Cumulative preferred dividends		(334	)		-			(334	)		-			(334	)
Non-GAAP net income (loss) applicable to common shares	$	(421	)	$	686		$	(290	)	$	(392	)	$	321

Net earnings (loss) per common share - basic	$	(0.16	)	$	(0.02	)	$	0.00		$	(0.01	)	$	(0.03	)
Non-GAAP net earnings (loss) per common share - basic	$	(0.01	)	$	0.02		$	(0.01	)	$	(0.01	)	$	0.01
Basic weighted average number of common shares outstanding		36,161,613			35,898,773			35,826,731			35,761,251			35,747,979

Net earnings (loss) per common share - diluted	$	(0.16	)	$	(0.02	)	$	0.00		$	(0.01	)	$	(0.03	)
Non-GAAP net earnings (loss) per common share - diluted	$	(0.01	)	$	0.02		$	(0.01	)	$	(0.01	)	$	0.01
Diluted weighted average number of common shares outstanding		36,161,613			35,898,773			36,466,215			35,761,251			35,747,979

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

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results

Discussion of Non-GAAP Financial Measures:

This press release contains certain non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Reconciliations between non-GAAP and GAAP measures are set forth above in Financial Schedules (E) and (J).

The following non-GAAP financial measures are discussed herein: adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net earnings (loss) per common share – basic and diluted. The presentation of these additional financial measures is not intended to be considered in isolation from, or superior to, or as a substitute for the financial measures prepared and presented in accordance with GAAP (Generally Accepted Accounting Principles), including the net income or net loss of USAT. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with USAT's net income or net loss as determined in accordance with GAAP. These non-GAAP financial measures are not required by or defined under GAAP and may be materially different from the non-GAAP financial measures used by other companies. USAT has provided above in Financial Schedules (E) and (J) the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

As used herein, non-GAAP net income 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 professional service fees recorded in SG&A during the quarter ended December 31, 2015 that were incurred in connection with the VendScreen transaction, non-recurring costs and expenses recorded in SG&A during the quarter ended March 2016 that were incurred in connection with the acquisition and integration of the VendScreen business, and professional fees incurred during the March 31, 2016 quarter in connection with the class action litigation. Non-GAAP net earnings (loss) per common share - diluted is calculated by dividing non-GAAP net income (loss) applicable to common shares by the number of diluted weighted average shares outstanding.

Management believes that non-GAAP net income (loss) and non-GAAP net earnings (loss) per common share - diluted 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. Additionally, the Company utilizes non-GAAP net income as a metric in its management and executive officer incentive compensation plans.

USA Technologies Announces Third Quarter Fiscal Year 2016 Financial Results

Adjusted EBITDA represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, non-recurring professional service fees recorded in SG&A during the quarter ended December 31, 2015 that were incurred in connection with the VendScreen transaction, non-recurring costs and expenses recorded in SG&A during the quarter ended March 31, 2016 that were incurred in connection with the acquisition and integration of the VendScreen business, professional fees incurred during the March 31, 2016 quarter in connection with the class action litigation, 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 USAT's operations. We have excluded the non-cash expense, stock-based compensation, as it does not reflect the cash-based operations of USAT. We have excluded the nonrecurring costs and expenses incurred in connection with the VendScreen transaction in order to allow more accurate comparisons of the financial results to historical operations. We have excluded the professional fees incurred in connection with the class action litigation because we believe they represent a charge that is not related to USAT’s 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 management and executive officer incentive compensation plans.

Investor Contact:

Mike Bishop

The Blueshirt Group

Tel: +1 415-217-4968

mike@blueshirtgroup.com

Source: USA Technologies, Inc.

F-USAT

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