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Press Release: USA Technologies Reports Second -2-

· 02/04/2021 16:05
USA Technologies, Inc. Condensed Consolidated Balance Sheets (Unaudited) December 31, June 30, ($ in thousands, except share data) 2020 2020 ----------------------------------- --------------- ----------- Assets Current assets: Cash and cash equivalents $ 28,162 $ 31,713 Accounts receivable, net 20,080 17,273 Finance receivables, net 7,196 7,468 Inventory, net 8,794 9,128 Prepaid expenses and other current assets 1,419 1,782 -------------- -------- Total current assets 65,651 67,364 Non-current assets: Finance receivables due after one year 10,296 11,213 Property and equipment, net 7,185 7,872 Operating lease right-of-use assets 4,799 5,603 Intangibles, net 21,501 23,033 Goodwill 63,945 63,945 Other assets 2,130 1,993 -------------- -------- Total non-current assets 109,856 113,659 Total assets $ 175,507 $181,023 ========== ======= Liabilities, convertible preferred stock and shareholders' equity Current liabilities: Accounts payable $ 26,907 $ 27,058 Accrued expenses 29,479 30,265 Current obligations under long-term debt 3,804 3,328 Deferred revenue 1,648 1,698 -------------- -------- Total current liabilities 61,838 62,349 Long-term liabilities: Deferred income taxes 148 137 Long-term debt, less current portion 13,901 12,435 Operating lease liabilities, non-current 4,241 4,749 -------------- -------- Total long-term liabilities 18,290 17,321 Total liabilities 80,128 79,670 -------------- -------- Commitments and contingencies Convertible preferred stock: Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preferences of $21,113 and $20,779 at December 31, 2020 and June 30, 2020, respectively 3,138 3,138 Shareholders' equity: Preferred stock, no par value, 1,800,000 shares authorized -- -- Common stock, no par value, 640,000,000 shares authorized, 65,285,674 and 65,196,882 shares issued and outstanding at December 31, 2020 and June 30, 2020, respectively 404,433 401,240 Accumulated deficit (312,192) (303,025) -------------- -------- Total shareholders' equity 92,241 98,215 -------------- -------- Total liabilities, convertible preferred stock and shareholders' equity $ 175,507 $181,023 ========== ======= USA Technologies, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three months ended Six months ended December 31, December 31, ---------------------------- ------------------------------ ($ in thousands, except per share data) 2020 2019 2020 2019 ------------------ ------------- ------------- ------------- ------------- Revenue: License and transaction fees $ 33,214 $ 35,754 $ 66,322 $ 70,363 Equipment sales 5,071 8,297 8,840 17,047 ------------ ------------ ------------ ------------ Total revenue 38,285 44,051 75,162 87,410 Cost of sales: Cost of license and transaction fees 20,617 22,579 39,953 44,668 Cost of equipment sales 5,367 8,710 8,668 18,564 ------------ ------------ ------------ ------------ Total cost of sales 25,984 31,289 48,621 63,232 ------------ ------------ ------------ ------------ Gross profit 12,301 12,762 26,541 24,178 ------------ ------------ ------------ ------------ Operating expenses: Selling, general and administrative 13,831 16,161 30,641 31,342 Investigation, proxy solicitation and restatement expenses -- 3,277 -- 9,768 Depreciation and amortization 1,052 1,080 2,120 2,102 ------------ ------------ ------------ ------------ Total operating expenses 14,883 20,518 32,761 43,212 ------------ ------------ ------------ ------------ Operating loss (2,582) (7,756) (6,220) (19,034) ------------ ------------ ------------ ------------ Other income (expense): Interest income 325 283 675 577 Interest expense (596) (833) (3,881) (1,298) ------------ ------------ ------------ ------------ Total other income (expense), net (271) (550) (3,206) (721) ------------ ------------ ------------ ------------ Loss before income taxes (2,853) (8,306) (9,426) (19,755) Provision for income taxes (49) (72) (89) (131) ------------ ------------ ------------ ------------ Net loss (2,902) (8,378) (9,515) (19,886)

All statements other than statements of historical fact included in this release, including without limitation USAT's future prospects and performance, the business strategy and the plans and objectives of USAT's management for future operations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this release, words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "guidance, " "predict," "potential," "continue," "likely," "will," "would" and variations of these terms and similar expressions, or the negative of these terms or similar expressions, as they relate to USAT or its management, may identify forward-looking statements. Such forward-looking statements are based on the reasonable 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 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 uncertainties associated with COVID-19, including its possible effects on USAT's operations, financial condition and the demand for USAT's products and services; the ability of USAT to predict or estimate its future quarterly or annual revenue and expenses given the developing and unpredictable market for its products; 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; the ability of USAT to make available and successfully upgrade current customers to new standards and protocols; 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; disruptions to our systems, breaches in the security of transactions involving our products or services, or failure of our processing systems; or other risks discussed in USAT's filings with the U.S. Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended June 30, 2020 and its Quarterly Reports on Form 10-Q for the quarters ended September 30, 2020 and December 31, 2020. 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. If USAT updates one or more forward-looking statements, no inference should be drawn that USAT will make additional updates with respect to those or other forward-looking statements.

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February 04, 2021 16:05 ET (21:05 GMT)