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Press Release: USA Technologies Reports Second -3-

· 02/04/2021 16:05
Three months ended Other reporting periods ---------------------------------------- ----------------------------- Six months Nine Year ended months December March ended December ended September 31, 31, June 30, June 30, 31, March 31, ($ in thousands) 30, 2019 2019 2020 2020 2020 2019 2020 ----------------- ----------- -------- ------- -------- -------- -------- --------- Selling, general and administrative, before revision (a) (b) $ 17,196 $12,520 $18,065 $12,485 $60,266 $29,716 $47,781 Investigation, proxy solicitation and restatement expenses, before revision (a) (b) 4,476 6,918 2,004 7,894 21,292 11,394 13,398 Additional amounts reclassified from (to) Selling, general and administrative to (from) Investigation, proxy solicitation and restatement expenses 2,015 (3,641) 2,177 (2,033) (1,482) (1,626) 551 Selling, general and administrative, after revision (c) 15,181 16,161 15,888 14,518 61,748 31,342 47,230 Investigation, proxy solicitation and restatement expenses, after revision (c) 6,491 3,277 4,181 5,861 19,810 9,768 13,949 Depreciation and amortization, no change (a) (b) (d) 1,022 1,080 1,107 1,098 4,307 2,102 3,209 ----------- ------- ------- ------- ------- ------- ------- Total operating expenses, no change (a) (b) (d) $ 22,694 $20,518 $21,176 $21,477 $85,865 $43,212 $64,388 ======= ====== ====== ====== ====== ====== ====== (a) The amounts for the three months ended September 30, 2019, December 31, 2019, March 31, 2020 and full year ended June 30, 2020 were presented in the Company's June 30, 2020 Annual Report on Form 10-K. (b) The amounts for the three months ended September 30, 2019 were presented in the Company's September 30, 2020 Quarterly Report on Form 10-Q.Preferred dividends -- -- (334) (334) ------------ ------------ Net loss applicable to common shares $ (2,902) $ (8,378) $ (9,849) $ (20,220) ======== ======== ======== ======== Net loss per common share Basic $ (0.04) $ (0.13) $ (0.15) $ (0.33) Diluted $ (0.04) $ (0.13) $ (0.15) $ (0.33) Weighted average number of common shares outstanding Basic 64,913,364 63,664,256 64,886,183 61,891,197 Diluted 64,913,364 63,664,256 64,886,183 61,891,197 USA Technologies, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) Six months ended December 31, --------------------- ($ in thousands) 2020 2019 ---------------------------------------- -------- --------- OPERATING ACTIVITIES: Net loss $(9,515) $(19,886) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation 3,149 2,032 Amortization of debt discount and issuance costs 2,657 311 Provision for expected losses 1,286 862 Provision for inventory reserve 1,262 1,006 Depreciation and amortization included in operating expenses 2,120 2,102 Depreciation included in cost of sales for rental equipment 1,054 1,391 Other 957 1,072 Changes in operating assets and liabilities: Accounts receivable (2,987) 2,133 Finance receivables 429 (990) Inventory (928) (1,055) Prepaid expenses and other assets 243 (411) Accounts payable and accrued expenses 195 2,424 Operating lease liabilities (526) (776) Deferred revenue (50) (52) ------- -------- Net cash provided by operating activities (654) (9,837) ------- -------- INVESTING ACTIVITIES: Purchase of property and equipment (970) (1,361) Proceeds from sale of property and equipment 11 31 ------- -------- Net cash used in investing activities (959) (1,330) ------- -------- FINANCING ACTIVITIES: Proceeds from long-term debt issuance by Antara, net of issuance costs paid to Antara -- 14,790 Proceeds from equity issuance by Antara, net of issuance costs paid to Antara -- 18,560 Payment of third-party debt issuance costs -- (33) Repayment of 2018 JPMorgan Revolving Credit Facility -- (10,000) Proceeds from 2021 JPMorgan Revolving Credit Facility 1,750 -- Repayment of 2021 JPMorgan Revolving Credit Facility (1,750) -- Proceeds from long-term debt issuance by JPMorgan Chase Bank, N.A., net of debt issuance costs 14,550 -- Repayment of long-term debt (15,364) (2,109) Proceeds from exercise of common stock options 76 -- Payment of Antara prepayment penalty and commitment termination fee (1,200) -- ------- -------- Net cash used in (provided by) financing activities (1,938) 21,208 ------- -------- Net (decrease) increase in cash and cash equivalents (3,551) 10,041 Cash and cash equivalents at beginning of year 31,713 27,464 ------- -------- Cash and cash equivalents at end of period $28,162 $ 37,505 ====== ======= Supplemental disclosures of cash flow information: Interest paid in cash $ 615 $ 565 Supplemental disclosures of noncash financing activities: Third-party debt issuance costs related to Antara financing, incurred during the six months ended December 31, 2019 and paid the nine months ended March 31, 2020 $ -- $ 1,947 Registration termination fee related to Antara financing, incurred during the six months ended December 31, 2019 and paid during the nine months ended March 31, 2020 $ -- $ 1,223

Basis of Presentation and Preparation of Our Condensed Consolidated Financial Statements

As previously disclosed in the Company's June 30, 2020 Annual Report on Form 10-K and the September 30, 2020 Quarterly Report on Form 10-Q, during the fourth quarter of fiscal year 2020, the Company reclassified certain operating expenses previously reported in the first three quarters of fiscal year 2020 as Selling, general and administrative expenses to Investigation, proxy solicitation and restatement expenses. The reclassifications resulted from management's conclusion that those operating expenses related to non-recurring professional services fees to assist the Company with accounting and compliance activities following the filing of the 2019 Form 10-K, as well as the proxy solicitation costs incurred in fiscal year 2020. These reclassifications did not affect Total operating expenses or Net loss.

As part of the Company's financial statement close process for the quarter ended December 31, 2020, management identified that the previously reported reclassification amounts from Selling, general and administrative expenses to Investigation, proxy solicitation and restatement expenses as disclosed in the June 30, 2020 Annual Report on Form 10-K and the September 30, 2020 Quarterly Report on Form 10-Q needed to be revised to properly reflect expense accrual amounts for certain vendors that were incorrectly excluded from the previously calculated amounts. These revisions to the reclassification amounts do not affect the previously reported Depreciation and amortization, Total operating expenses or Net loss for the quarters ended September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020 or the full year ended June 30, 2020 and other interim reporting periods. The Company analyzed the potential impact of the reclassification error in accordance with the appropriate guidance, from both a qualitative and quantitative perspective, and concluded that the error was not material to any individual interim or annual period.

Operating expenses for each quarter of fiscal year 2020 and other reporting periods before and after the revision discussed above are as follows:

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