USA Technologies, Inc. (NASDAQ:USAT) ("USAT"), a leader of wireless, cashless payment and M2M/IoT solutions for small-ticket, self-serve retailing industries, today reported results for its second quarter ended December 31, 2015.
Second Quarter Financial Highlights:
- Total quarterly revenue of $18.5 million, a year-over-year increase of 44%
- 20,000 net connections for the quarter compared to 12,000 in the same quarter last year, a year-over-year increase of 67%
- 369,000 connections to ePort service, a year-over-year increase of 28%
- Record 10,625 customers compared to 8,450 in the same quarter last year, a year-over-year increase of 26%
- Quarterly record license and transaction fee revenue of $13.7 million, a year-over-year increase of 30%
- Quarterly license and transaction fees gross margins increased to 33.7% from 31.7% in the prior year
- Quarterly adjusted EBITDA of $2.3 million, a year-over-year increase of 34%
- Quarterly GAAP net loss of $0.9 million, including the impact of $1.2 million non-cash expense for the fair value warrant liability adjustment
- Quarterly Non-GAAP net income of $0.7 million, or $0.02 per share
- Achieved positive free cash flow* for fourth straight quarter fueled by success in the company’s QuickStart third-party leasing program
*(Defined as cash flow from operations less cash used for the purchase of equipment for the JumpStart rental program.)
Second Quarter Financial Highlights & Transaction Data: | ||||||||||||||||||||
Three months ended, | ||||||||||||||||||||
| December 31, | ||||||||||||||||||||
| (Connections, transactions and $'s in thousands, except per share data) | 2015 | 2014 | # Change | % Change | ||||||||||||||||
| Revenues: | ||||||||||||||||||||
| License and transaction fees | $ | 13,674 | $ | 10,480 | $ | 3,194 | 30 | % | ||||||||||||
| Equipment sales | 4,829 | 2,342 | 2,487 | 106 | % | |||||||||||||||
| Total revenues | $ | 18,503 | $ | 12,822 | $ | 5,681 | 44 | % | ||||||||||||
| License and transaction fees gross margin | 33.7 | % | 31.7 | % | 2.0 | % | 6.3 | % | ||||||||||||
| Equipment sales gross margin | 18.1 | % | 17.6 | % | 0.6 | % | 3.2 | % | ||||||||||||
| Operating income | $ | 594 | $ | 51 | $ | 543 | 1064.7 | % | ||||||||||||
| Adjusted EBITDA | $ | 2,260 | $ | 1,681 | $ | 579 | 34.4 | % | ||||||||||||
| Net loss | $ | (874 | ) | $ | (261 | ) | $ | (613 | ) | 234.9 | % | |||||||||
| Net loss per common share - basic and diluted | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.01 | ) | 100.0 | % | |||||||||
| Net New Connections | 20 | 12 | 8 | 67 | % | |||||||||||||||
| Total Connections (at period end) | 369 | 288 | 81 | 28 | % | |||||||||||||||
| Total Number of Transactions | 76,000 | 51,000 | 25,000 | 49 | % | |||||||||||||||
| Transaction Volume | $ | 138,000 | $ | 89,300 | $ | 48,700 | 55 | % | ||||||||||||
“The growing success at USA Technologies validates that the self-service retail market is moving toward the acceptance and adoption of cashless payments,” said Stephen P. Herbert, USA Technologies’ chairman and chief executive officer. “This is an exciting time for us as we see major customers move toward migrating all of their machines to the ePort Connect service, as we simultaneously increase our customer base. With the acquisition of VendScreen we are driving additional value to each connection with the most advanced cloud based interactive content delivery system for the self-service market. We are enthusiastic about the traction we have made this quarter and our organic growth, coupled with the increasing operating leverage, underpin our confidence that USAT will continue to deliver strong results.”
Fiscal 2016 Outlook
For full fiscal year 2016, management expects to add more than 75,000 net new connections, bringing total connections on the service to over 400,000 and expects total revenue to be between $69 million and $71 million. Additionally, we anticipate that QuickStart will remain a popular program for customers, and management expects it to drive positive free cash flows 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, February 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 # 42182812.
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 February 12, 2016 until 11:59 p.m. Eastern Time on February 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 # 42182812. 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 is a leader of wireless, cashless payment and M2M/IoT telemetry solutions for small-ticket, self-serve retailing industries. ePort Connect® is the company's flagship service platform, a PCI-compliant, end-to-end suite of cashless payment and telemetry services specially tailored to fit the needs of small ticket, self-service retailing industries. USA Technologies 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, Chase Paymentech, Visa, MasterCard, and customers such as Compass 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.
Financial Schedules:
A. Comparative Income Statement For 6 Months Ended December 31, 2015 and December 31, 2014
B. Comparative Income Statement For 3 Months Ended December 31, 2015 and December 31, 2014
C. Five Quarter Select Key Performance Indicators
D. Comparative Condensed Balance Sheets December 31, 2015 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 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 December 31, 2015 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.
(A) Comparative Income Statement For 6 Months Ended December 31, 2015 and December 31, 2014 | ||||||||||||||||||||||||||||
| ($ in thousands, except share and per share data) | For the six months ended December 31, | |||||||||||||||||||||||||||
| (unaudited) | 2015 | % of | 2014 | % of | Change | % Change | ||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||
| License and transaction fees | $ | 26,599 | 75.8 | % | $ | 20,636 | 82.3 | % | $ | 5,963 | 28.9 | % | ||||||||||||||||
| Equipment sales | 8,504 | 24.2 | % | 4,438 | 17.7 | % | 4,066 | 91.6 | % | |||||||||||||||||||
| Total revenues | 35,103 | 100.0 | % | 25,074 | 100.0 | % | 10,029 | 40.0 | % | |||||||||||||||||||
| Costs of sales/revenues: | ||||||||||||||||||||||||||||
| Cost of services | 17,772 | 66.8 | % | 14,409 | 69.8 | % | 3,363 | 23.3 | % | |||||||||||||||||||
| Cost of equipment | 6,801 | 80.0 | % | 3,796 | 85.5 | % | 3,005 | 79.2 | % | |||||||||||||||||||
| Total costs of sales/revenues | 24,573 | 70.0 | % | 18,205 | 72.6 | % | 6,368 | 35.0 | % | |||||||||||||||||||
| Gross profit: | ||||||||||||||||||||||||||||
| License and transaction fees | 8,827 | 33.2 | % | 6,227 | 30.2 | % | 2,600 | 41.8 | % | |||||||||||||||||||
| Equipment sales | 1,703 | 20.0 | % | 642 | 14.5 | % | 1,061 | 165.3 | % | |||||||||||||||||||
| Total gross profit | 10,530 | 30.0 | % | 6,869 | 27.4 | % | 3,661 | 53.3 | % | |||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||
| Selling, general and administrative | 9,558 | 27.2 | % | 7,163 | 28.6 | % | 2,395 | 33.4 | % | |||||||||||||||||||
| Depreciation | 266 | 0.8 | % | 321 | 1.3 | % | (55 | ) | -17.1 | % | ||||||||||||||||||
| Total operating expenses | 9,824 | 28.0 | % | 7,484 | 29.8 | % | 2,340 | 31.3 | % | |||||||||||||||||||
| Operating income (loss) | 706 | 2.0 | % | (615 | ) | -2.5 | % | 1,321 | -214.8 | % | ||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||
| Interest income | 71 | 0.2 | % | 14 | 0.1 | % | 57 | 407.1 | % | |||||||||||||||||||
| Interest expense | (223 | ) | -0.6 | % | (124 | ) | -0.5 | % | (99 | ) | 79.8 | % | ||||||||||||||||
| Change in fair value of warrant liabilities | (887 | ) | -2.5 | % | 445 | 1.8 | % | (1,332 | ) | -299.3 | % | |||||||||||||||||
| Total other income (expense), net | (1,039 | ) | -3.0 | % | 335 | 1.3 | % | (1,374 | ) | -410.1 | % | |||||||||||||||||
| (Loss) before provision for income taxes | (333 | ) | -0.9 | % | (280 | ) | -1.1 | % | (53 | ) | 18.9 | % | ||||||||||||||||
| Provision for income taxes | (181 | ) | (42 | ) | (139 | ) | 331.0 | % | ||||||||||||||||||||
| Net loss | (514 | ) | -1.5 | % | (322 | ) | -1.3 | % | (192 | ) | 59.6 | % | ||||||||||||||||
| Cumulative preferred dividends | (332 | ) | -0.9 | % | (332 | ) | -1.3 | % | - | 0.0 | % | |||||||||||||||||
| Net loss applicable to common shares | $ | (846 | ) | -2.4 | % | $ | (654 | ) | -2.6 | % | $ | (192 | ) | 29.4 | % | |||||||||||||
| Net loss per common share - basic and diluted | $ | (0.02 | ) | $ | (0.02 | ) | $ | - | 0.0 | % | ||||||||||||||||||
| Basic and diluted weighted average number of common shares outstanding | 35,808,488 | 35,625,199 | 183,289 | 0.5 | % | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 4,011 | 11.4 | % | $ | 2,627 | 20.5 | % | $ | 1,384 | 52.7 | % | ||||||||||||||||
| Non-GAAP net income (loss) applicable to common shares | $ | 415 | 1.2 | % | $ | (704 | ) | -5.5 | % | $ | 1,119 | 158.9 | % | |||||||||||||||
(B) Comparative Income Statement For 3 Months Ended December 31, 2015 and December 31, 2014 | ||||||||||||||||||||||||||||
| ($ in thousands, except share and per share data) | For the three months ended December 31, | |||||||||||||||||||||||||||
| (unaudited) | 2015 | % of | 2014 | % of | Change | % Change | ||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||
| License and transaction fees | $ | 13,674 | 73.9 | % | $ | 10,480 | 81.7 | % | $ | 3,194 | 30.5 | % | ||||||||||||||||
| Equipment sales | 4,829 | 26.1 | % | 2,342 | 18.3 | % | 2,487 | 106.2 | % | |||||||||||||||||||
| Total revenues | 18,503 | 100.0 | % | 12,822 | 100.0 | % | 5,681 | 44.3 | % | |||||||||||||||||||
| Costs of sales/revenues: | ||||||||||||||||||||||||||||
| Cost of services | 9,067 | 66.3 | % | 7,158 | 68.3 | % | 1,909 | 26.7 | % | |||||||||||||||||||
| Cost of equipment | 3,953 | 81.9 | % | 1,930 | 82.4 | % | 2,023 | 104.8 | % | |||||||||||||||||||
| Total costs of sales/revenues | 13,020 | 70.4 | % | 9,088 | 70.9 | % | 3,932 | 43.3 | % | |||||||||||||||||||
| Gross profit: | ||||||||||||||||||||||||||||
| License and transaction fees | 4,607 | 33.7 | % | 3,322 | 31.7 | % | 1,285 | 38.7 | % | |||||||||||||||||||
| Equipment sales | 876 | 18.1 | % | 412 | 17.6 | % | 464 | 112.6 | % | |||||||||||||||||||
| Total gross profit | 5,483 | 29.6 | % | 3,734 | 29.1 | % | 1,749 | 46.8 | % | |||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||
| Selling, general and administrative | 4,762 | 25.7 | % | 3,531 | 27.5 | % | 1,231 | 34.9 | % | |||||||||||||||||||
| Depreciation | 127 | 0.7 | % | 152 | 1.2 | % | (25 | ) | -16.4 | % | ||||||||||||||||||
| Total operating expenses | 4,889 | 26.4 | % | 3,683 | 28.7 | % | 1,206 | 32.7 | % | |||||||||||||||||||
| Operating income | 594 | 3.2 | % | 51 | 0.4 | % | 543 | 1064.7 | % | |||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||
| Interest income | 20 | 0.1 | % | 4 | 0.0 | % | 16 | 400.0 | % | |||||||||||||||||||
| Interest expense | (104 | ) | -0.6 | % | (49 | ) | -0.4 | % | (55 | ) | 112.2 | % | ||||||||||||||||
| Change in fair value of warrant liabilities | (1,230 | ) | -6.6 | % | 135 | 1.1 | % | (1,365 | ) | -1011.1 | % | |||||||||||||||||
| Total other income (expense), net | (1,314 | ) | -7.1 | % | 90 | 0.7 | % | (1,404 | ) | -1560.0 | % | |||||||||||||||||
| Income (loss) before provision for income taxes | (720 | ) | -3.9 | % | 141 | 1.1 | % | (861 | ) | -610.6 | % | |||||||||||||||||
| Provision for income taxes | (154 | ) | (402 | ) | 248 | -61.7 | % | |||||||||||||||||||||
| Net loss | (874 | ) | -4.7 | % | (261 | ) | -2.0 | % | (613 | ) | 234.9 | % | ||||||||||||||||
| Cumulative preferred dividends | - | 0.0 | % | - | 0.0 | % | - | 0.0 | % | |||||||||||||||||||
| Net loss applicable to common shares | $ | (874 | ) | -4.7 | % | $ | (261 | ) | -2.0 | % | $ | (613 | ) | 234.9 | % | |||||||||||||
| Net loss per common share - basic and diluted | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.01 | ) | 100.0 | % | |||||||||||||||||
| Basic and diluted weighted average number of common shares outstanding | 35,828,776 | 35,657,519 | 171,257 | 0.5 | % | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 2,260 | 12.2 | % | $ | 1,681 | 13.1 | % | $ | 579 | 34.4 | % | ||||||||||||||||
| Non-GAAP net income (loss) applicable to common shares | $ | 686 | 3.7 | % | $ | 6 | 0.0 | % | $ | 680 | 11333.3 | % | ||||||||||||||||
(C) Five Quarter Select Key Performance Indicators: | |||||||||||||||||||||
| Three months ended | |||||||||||||||||||||
| (unaudited) | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| 2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||||||||
| Connections: | |||||||||||||||||||||
| Gross New Connections | 24,000 | 20,000 | 34,000 | 24,000 | 14,000 | ||||||||||||||||
| % from Existing Customer Base | 89 | % | 86 | % | 89 | % | 82 | % | 82 | % | |||||||||||
| Net New Connections | 20,000 | 16,000 | 31,000 | 14,000 | 12,000 | ||||||||||||||||
| Total Connections | 369,000 | 349,000 | 333,000 | 302,000 | 288,000 | ||||||||||||||||
| Customers: | |||||||||||||||||||||
| New Customers Added | 350 | 675 | 675 | 475 | 550 | ||||||||||||||||
| Total Customers | 10,625 | 10,275 | 9,600 | 8,925 | 8,450 | ||||||||||||||||
| Volumes: | |||||||||||||||||||||
| Total Number of Transactions (millions) | 76.0 | 68.8 | 62.2 | 54.8 | 51.0 | ||||||||||||||||
| Transaction Volume ($millions) | $ | 138.0 | $ | 126.4 | $ | 112.8 | $ | 97.7 | $ | 89.3 | |||||||||||
Financing Structure of Connections: | |||||||||||||||||||||
| JumpStart | 10.1 | % | 10.2 | % | 6.0 | % | 11.3 | % | 14.4 | % | |||||||||||
| QuickStart & All Others * | 89.9 | % | 89.8 | % | 94.0 | % | 88.7 | % | 85.6 | % | |||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
*Includes credit sales with standard trade receivable terms | |||||||||||||||||||||
(D) Comparative Condensed Balance Sheets December 31, 2015 to June 30, 2015 | ||||||||||||||||||||||
| ($ in thousands) | December 31, | June 30, | ||||||||||||||||||||
| (unaudited) | 2015 | 2015 | $ Change | % Change | ||||||||||||||||||
| Assets | ||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||
| Cash | $ | 14,809 | $ | 11,374 | $ | 3,435 | 30 | % | ||||||||||||||
| Accounts receivable, less allowance | * | 6,976 | 5,971 | 1,005 | 17 | % | ||||||||||||||||
| Finance receivables | 1,503 | 941 | 562 | 60 | % | |||||||||||||||||
| Inventory | 2,849 | 4,216 | (1,367 | ) | -32 | % | ||||||||||||||||
| Deferred income taxes | 1,258 | 1,258 | - | 0 | % | |||||||||||||||||
| Prepaid expenses and other current assets | 902 | 574 | 328 | 57 | % | |||||||||||||||||
| Total current assets | 28,297 | 24,334 | 3,963 | 16 | % | |||||||||||||||||
| Finance receivables, less current portion | 2,435 | 3,698 | (1,263 | ) | -34 | % | ||||||||||||||||
| Property and equipment, net | 10,856 | 12,869 | (2,013 | ) | -16 | % | ||||||||||||||||
| Goodwill and intangbiles | 8,095 | 8,095 | - | 0 | % | |||||||||||||||||
| Deferred income taxes | 25,607 | 25,788 | (181 | ) | -1 | % | ||||||||||||||||
| Other assets | 326 | 350 | (24 | ) | -7 | % | ||||||||||||||||
| Total assets | $ | 75,616 | $ | 75,134 | $ | 482 | 1 | % | ||||||||||||||
| Liabilities and shareholders' equity | ||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||
| Accounts payable | * | $ | 7,876 | $ | 10,542 | $ | (2,666 | ) | -25 | % | ||||||||||||
| Accrued expenses | 2,116 | 2,108 | 8 | 0 | % | |||||||||||||||||
| Line of credit | 7,000 | 4,000 | 3,000 | 75 | % | |||||||||||||||||
| Current obligations under long-term debt | 524 | 478 | 46 | 10 | % | |||||||||||||||||
| Income taxes payable | - | 54 | (54 | ) | -100 | % | ||||||||||||||||
| Deferred gain from sale-leaseback transactions | 860 | 860 | - | 0 | % | |||||||||||||||||
| Total current liabilities | 18,376 | 18,042 | 334 | 2 | % | |||||||||||||||||
| Long-term liabilities | ||||||||||||||||||||||
| Long-term debt, less current portion | 1,584 | 1,854 | (270 | ) | -15 | % | ||||||||||||||||
| Accrued expenses, less current portion | 26 | 49 | (23 | ) | -47 | % | ||||||||||||||||
| Warrant liabilities | 1,865 | 978 | 887 | 91 | % | |||||||||||||||||
| Deferred gain from sale-leaseback transactions, less current portion | 470 | 900 | (430 | ) | -48 | % | ||||||||||||||||
| Total long-term liabilities | 3,945 | 3,781 | 164 | 4 | % | |||||||||||||||||
| Total liabilities | 22,321 | 21,823 | 498 | 2 | % | |||||||||||||||||
| Shareholders' equity: | ||||||||||||||||||||||
| Preferred stock, no par value | 3,138 | 3,138 | - | 0 | % | |||||||||||||||||
| Common stock, no par value | 225,372 | 224,874 | 498 | 0 | % | |||||||||||||||||
| Accumulated deficit | (175,215 | ) | (174,701 | ) | (514 | ) | 0 | % | ||||||||||||||
| Total shareholders' equity | 53,295 | 53,311 | (16 | ) | 0 | % | ||||||||||||||||
| Total liabilities and shareholders' equity | $ | 75,616 | $ | 75,134 | $ | 482 | 1 | % | ||||||||||||||
| Total current assets | $ | 28,297 | $ | 24,334 | $ | 3,963 | 16 | % | ||||||||||||||
| Total current liabilities | 18,376 | 18,042 | 334 | 2 | % | |||||||||||||||||
| Net working capital | $ | 9,921 | $ | 6,292 | $ | 3,629 | 58 | % | ||||||||||||||
| * Accounts receivable, net of allowance for doubtful accounts and accounts payable have increased by the following amounts due to reclassifications | $ | - | $ | 1,299 | ||||||||||||||||||
(E) Five Quarter Statement of Operations and Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||
| For the three months ended | ||||||||||||||||||||||||||||||||||||
| (unaudited) | December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||||||||||||
| 2015 | % of Sales | 2015 | % of Sales | 2015 | % of Sales | 2015 | % of Sales | 2014 | % of Sales | |||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||
| License and transaction fees | $ | 13,674 | 73.9 | % | $ | 12,925 | 77.9 | % | $ | 11,938 | 67.7 | % | $ | 11,060 | 72.0 | % | $ | 10,480 | 81.7 | % | ||||||||||||||||
| Equipment Sales | 4,829 | 26.1 | % | 3,675 | 22.1 | % | 5,708 | 32.3 | % | 4,298 | 28.0 | % | 2,342 | 18.3 | % | |||||||||||||||||||||
| Total revenue | 18,503 | 100.0 | % | 16,600 | 100.0 | % | 17,646 | 100.0 | % | 15,358 | 100.0 | % | 12,822 | 100.0 | % | |||||||||||||||||||||
| Costs of sales/revenues: | ||||||||||||||||||||||||||||||||||||
| License and transaction fees | 9,067 | 66.3 | % | 8,705 | 67.4 | % | 7,863 | 65.9 | % | 7,157 | 64.7 | % | 7,158 | 68.3 | % | |||||||||||||||||||||
| Equipment sales | 3,953 | 81.9 | % | 2,848 | 77.5 | % | 4,975 | 87.2 | % | 3,055 | 71.1 | % | 1,930 | 82.4 | % | |||||||||||||||||||||
| Total costs of sales/revenues | 13,020 | 70.4 | % | 11,553 | 69.6 | % | 12,838 | 72.8 | % | 10,213 | 57.9 | % | 9,088 | 51.5 | % | |||||||||||||||||||||
| Gross Profit: | ||||||||||||||||||||||||||||||||||||
| License and transaction fees | 4,607 | 33.7 | % | 4,220 | 32.6 | % | 4,075 | 34.1 | % | 3,903 | 35.3 | % | 3,323 | 31.7 | % | |||||||||||||||||||||
| Equipment sales | 876 | 18.1 | % | 827 | 22.5 | % | 733 | 12.8 | % | 1,243 | 28.9 | % | 412 | 17.6 | % | |||||||||||||||||||||
| Total gross profit | 5,483 | 29.6 | % | 5,047 | 30.4 | % | 4,808 | 27.2 | % | 5,145 | 33.5 | % | 3,734 | 29.1 | % | |||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 4,762 | 25.7 | % | 4,796 | 28.9 | % | 5,009 | 28.4 | % | 4,280 | 27.9 | % | 3,531 | 27.5 | % | |||||||||||||||||||||
| Depreciation | 127 | 0.7 | % | 139 | 0.8 | % | 156 | 0.9 | % | 135 | 0.9 | % | 152 | 1.2 | % | |||||||||||||||||||||
| Total operating expenses | 4,889 | 26.4 | % | 4,935 | 29.7 | % | 5,165 | 29.3 | % | 4,415 | 28.7 | % | 3,683 | 28.7 | % | |||||||||||||||||||||
| Operating income (loss) | 594 | 3.2 | % | 112 | 0.7 | % | (357 | ) | -2.0 | % | 730 | 4.8 | % | 51 | 0.4 | % | ||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||||||||||
| Interest income | 20 | 0.1 | % | 51 | 0.3 | % | 42 | 0.3 | % | 26 | 0.2 | % | 4 | 0.0 | % | |||||||||||||||||||||
| Other income | - | 0.0 | % | - | 0.0 | % | 52 | 0.3 | % | - | 0.0 | % | - | 0.0 | % | |||||||||||||||||||||
| Interest expense | (104 | ) | -0.6 | % | (119 | ) | -0.7 | % | (92 | ) | -0.6 | % | (85 | ) | -0.5 | % | (49 | ) | -0.3 | % | ||||||||||||||||
| Change in fair value of warrant liabilities | (1,230 | ) | -7.4 | % | 343 | 2.1 | % | 263 | 1.6 | % | (1,101 | ) | -6.6 | % | 135 | 0.8 | % | |||||||||||||||||||
| Total other income (expense), net | (1,314 | ) | -7.1 | % | 275 | 1.7 | % | 265 | 1.5 | % | (1,160 | ) | -7.6 | % | 90 | 0.7 | % | |||||||||||||||||||
| Income (loss) before provision for income taxes | (720 | ) | -3.9 | % | 387 | 2.3 | % | (92 | ) | -0.5 | % | (429 | ) | -2.8 | % | 141 | 1.1 | % | ||||||||||||||||||
| Provision for income taxes | (154 | ) | -0.8 | % | (27 | ) | -0.2 | % | (109 | ) | -0.6 | % | (138 | ) | -0.9 | % | (402 | ) | -3.1 | % | ||||||||||||||||
| Net income (loss) | (874 | ) | -4.7 | % | 360 | 2.2 | % | (201 | ) | -1.1 | % | (567 | ) | -3.7 | % | (261 | ) | -2.0 | % | |||||||||||||||||
| Less interest income | (20 | ) | -0.1 | % | (51 | ) | -0.3 | % | (42 | ) | -0.3 | % | (26 | ) | -0.2 | % | (4 | ) | 0.0 | % | ||||||||||||||||
| Plus interest expenses | 104 | 0.6 | % | 119 | 0.7 | % | 92 | 0.6 | % | 85 | 0.5 | % | 49 | 0.3 | % | |||||||||||||||||||||
| Plus income tax expense | 154 | 0.9 | % | 27 | 0.2 | % | 109 | 0.7 | % | 138 | 0.8 | % | 402 | 2.4 | % | |||||||||||||||||||||
| Plus depreciation expense | 1,323 | 8.0 | % | 1,350 | 8.1 | % | 1,381 | 8.3 | % | 1,433 | 8.6 | % | 1,444 | 8.7 | % | |||||||||||||||||||||
| Plus (less) change in fair value of warrant liabilities | 1,230 | 7.4 | % | (343 | ) | -2.1 | % | (263 | ) | -1.6 | % | 1,101 | 6.6 | % | (135 | ) | -0.8 | % | ||||||||||||||||||
| Plus stock-based compensation | 237 | 1.4 | % | 272 | 1.6 | % | 175 | 1.1 | % | 216 | 1.3 | % | 186 | 1.1 | % | |||||||||||||||||||||
| Plus due diligence/ acquisition costs | 106 | 0.6 | % | 17 | 0.1 | % | - | 0.0 | % | - | 0.0 | % | - | 0.0 | % | |||||||||||||||||||||
| Adjusted EBITDA | $ | 2,260 | 12.2 | % | $ | 1,751 | 10.6 | % | $ | 1,251 | 7.1 | % | $ | 2,380 | 15.5 | % | $ | 1,681 | 13.1 | % | ||||||||||||||||
See discussion of Non-GAAP financial measures later in this document
(F) Five Quarter Selling, General, & Administrative Expenses | ||||||||||||||||||||||||||||||||||||||||
Three months ended | ||||||||||||||||||||||||||||||||||||||||
| ($ in thousands) | December 31, | % of | September 30, | % of | June 30, | % of | March 30, | % of | December 31, | % of | ||||||||||||||||||||||||||||||
| (unaudited) | 2015 | SG&A | 2015 | SG&A | 2015 | SG&A | 2015 | SG&A | 2014 | SG&A | ||||||||||||||||||||||||||||||
| Salaries and benefit costs | $ | 2,786 | 58.6 | % | $ | 2,685 | 56.0 | % | $ | 2,295 | 45.8 | % | $ | 2,533 | 59.2 | % | $ | 2,132 | 60.4 | % | ||||||||||||||||||||
| Marketing related expenses | 335 | 7.0 | % | 333 | 6.9 | % | 580 | 11.6 | % | 184 | 4.3 | % | 215 | 6.1 | % | |||||||||||||||||||||||||
| Professional services | 839 | 17.6 | % | 782 | 16.3 | % | 844 | 16.8 | % | 708 | 16.5 | % | 460 | 13.0 | % | |||||||||||||||||||||||||
| Bad debt expense | 239 | 5.0 | % | 236 | 4.9 | % | 497 | 9.9 | % | 303 | 7.1 | % | 141 | 4.0 | % | |||||||||||||||||||||||||
| Premises, equipment and insurance costs | 347 | 7.3 | % | 399 | 8.3 | % | 475 | 9.5 | % | 372 | 8.7 | % | 370 | 10.5 | % | |||||||||||||||||||||||||
| Research and development expenses | 37 | 0.8 | % | 191 | 4.0 | % | 154 | 3.1 | % | 96 | 2.2 | % | 115 | 3.3 | % | |||||||||||||||||||||||||
| Due Diligence/ Acquisition Costs | 106 | 2.2 | % | 17 | 0.4 | % | - | 0.0 | % | - | 0.0 | % | - | 0.0 | % | |||||||||||||||||||||||||
| Other expenses | 73 | 1.5 | % | 153 | 3.2 | % | 164 | 3.3 | % | 84 | 2.0 | % | 98 | 2.8 | % | |||||||||||||||||||||||||
| Total SG&A expenses | $ | 4,762 | 100 | % | $ | 4,796 | 100 | % | $ | 5,009 | 100 | % | $ | 4,280 | 100 | % | $ | 3,531 | 100 | % | ||||||||||||||||||||
(G) Five Quarter Condensed Balance Sheet and Other Data | |||||||||||||||||||
| ($ in thousands) | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||
| (unaudited) | 2015 | 2015 | 2015 | 2015 | 2014 | ||||||||||||||
| Assets | |||||||||||||||||||
| Current assets: | |||||||||||||||||||
| Cash | $ | 14,809 | $ | 11,592 | $ | 11,374 | $ | 8,475 | $ | 6,734 | |||||||||
| Accounts receivable, less allowance | * | 6,976 | 6,448 | 5,971 | 5,245 | 4,591 | |||||||||||||
| Finance receivables | 1,503 | 946 | 941 | 750 | 363 | ||||||||||||||
| Inventory | 2,849 | 3,718 | 4,216 | 4,241 | 3,448 | ||||||||||||||
| Other current assets | 2,160 | 1,883 | 1,832 | 1,322 | 1,495 | ||||||||||||||
| Total current assets | 28,297 | 24,587 | 24,334 | 20,033 | 16,631 | ||||||||||||||
| Finance receivables, less current portion | 2,435 | 3,525 | 3,698 | 3,505 | 1,643 | ||||||||||||||
| Other assets | 326 | 342 | 350 | 423 | 411 | ||||||||||||||
| Property and equipment, net | 10,856 | 11,890 | 12,869 | 13,574 | 16,451 | ||||||||||||||
| Deferred income taxes | 25,607 | 25,761 | 25,788 | 26,169 | 26,290 | ||||||||||||||
| Goodwill and intangibles | 8,095 | 8,095 | 8,095 | 8,095 | 8,095 | ||||||||||||||
| Total assets | $ | 75,616 | $ | 74,200 | $ | 75,134 | $ | 71,799 | $ | 69,521 | |||||||||
| Liabilities and shareholders' equity | |||||||||||||||||||
| Current liabilities: | |||||||||||||||||||
| Accounts payable and accrued expenses | * | $ | 9,992 | $ | 11,615 | $ | 12,650 | $ | 9,044 | $ | 8,945 | ||||||||
| Line of credit | 7,000 | 4,000 | 4,000 | 4,000 | 4,000 | ||||||||||||||
| Other current liabilities | 1,384 | 1,497 | 1,392 | 1,294 | 1,064 | ||||||||||||||
| Total current liabilities | 18,376 | 17,112 | 18,042 | 14,338 | 14,009 | ||||||||||||||
| Long-term liabilities | |||||||||||||||||||
| Total long-term liabilities | 3,945 | 3,116 | 3,781 | 4,134 | 1,834 | ||||||||||||||
| Total liabilities | 22,321 | 20,228 | 21,823 | 18,472 | 15,843 | ||||||||||||||
| Shareholders' equity: | |||||||||||||||||||
| Total shareholders' equity | 53,295 | 53,972 | 53,311 | 53,327 | 53,678 | ||||||||||||||
| Total liabilities and shareholders' equity | $ | 75,616 | $ | 74,200 | $ | 75,134 | $ | 71,799 | $ | 69,521 | |||||||||
| Total current assets | $ | 28,297 | $ | 24,587 | $ | 24,334 | $ | 20,033 | $ | 16,631 | |||||||||
| Total current liabilities | 18,376 | 17,112 | 18,042 | 14,338 | 14,009 | ||||||||||||||
| Net working capital | $ | 9,921 | $ | 7,475 | $ | 6,292 | $ | 5,695 | $ | 2,622 | |||||||||
| * Accounts receivable, net of allowance for doubtful accounts and accounts payable have increased by the following amounts due to reclassifications | $ | - | $ | - | $ | 1,299 | $ | 1,842 | $ | 1,832 | |||||||||
Free cash flow (from operations less cash for purchase of rental equipment) | $ | 507 | $ | 362 | $ | 2,680 | $ | 65 | $ | (3,039 | ) | ||||||||
(H) Five Quarter Condensed Statement of Cash Flows | ||||||||||||||||||||||
| Three months ended | ||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||||
| ($ in thousands) | 2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||||||||
| (unaudited) | ||||||||||||||||||||||
| OPERATING ACTIVITIES: | ||||||||||||||||||||||
| Net income (loss) | $ | (874 | ) | $ | 360 | $ | (201 | ) | $ | (567 | ) | $ | (261 | ) | ||||||||
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 | 237 | 272 | 175 | 216 | 186 | |||||||||||||||||
| Gain on disposal of property and equipment | (41 | ) | (1 | ) | (4 | ) | (6 | ) | (4 | ) | ||||||||||||
| Bad debt expense | 238 | 236 | 497 | 303 | 141 | |||||||||||||||||
| Depreciation | 1,323 | 1,350 | 1,381 | 1,433 | 1,444 | |||||||||||||||||
| Change in fair value of warrant liabilities | 1,230 | (343 | ) | (263 | ) | 1,101 | (135 | ) | ||||||||||||||
| Deferred income taxes, net | 154 | 27 | 31 | 121 | 424 | |||||||||||||||||
| Gain on sale of finance receivables | - | - | (52 | ) | - | - | ||||||||||||||||
| Recognition of deferred gain from sale-leaseback transactions | (215 | ) | (215 | ) | (215 | ) | (215 | ) | (215 | ) | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||||
| Accounts receivable | * | (767 | ) | (713 | ) | (1,223 | ) | (984 | ) | (842 | ) | |||||||||||
| Finance receivables | 533 | 168 | (332 | ) | (2,249 | ) | (778 | ) | ||||||||||||||
| Inventory | 649 | 219 | (639 | ) | 651 | (805 | ) | |||||||||||||||
| Prepaid expenses and other assets | (254 | ) | 48 | (97 | ) | 151 | (248 | ) | ||||||||||||||
| Accounts payable | * | (1,623 | ) | (1,044 | ) | 3,491 | (141 | ) | (1,859 | ) | ||||||||||||
| Accrued expenses | (13 | ) | (2 | ) | 93 | 234 | (87 | ) | ||||||||||||||
| Income taxes payable | (70 | ) | - | 37 | 17 | - | ||||||||||||||||
| Net change in operating assets and liabilities | (1,545 | ) | (1,324 | ) | 1,330 | (2,321 | ) | (4,619 | ) | |||||||||||||
| Net cash provided by (used in) operating activities | 507 | 362 | 2,680 | 65 | (3,039 | ) | ||||||||||||||||
| INVESTING ACTIVITIES: | ||||||||||||||||||||||
| Purchase of property and equipment | (33 | ) | (49 | ) | (6 | ) | (4 | ) | (19 | ) | ||||||||||||
| Additions of internally developed software | (85 | ) | - | - | - | - | ||||||||||||||||
| Proceeds from sale of property and equipment | 101 | 4 | 8 | 19 | 11 | |||||||||||||||||
| Net cash provided by (used in) investing activities | (17 | ) | (45 | ) | 2 | 16 | (8 | ) | ||||||||||||||
| FINANCING ACTIVITIES: | ||||||||||||||||||||||
Net proceeds from the issuance (retirement) of common stock and exercise of common stock warrants | (40 | ) | 29 | - | - | (62 | ) | |||||||||||||||
| Excess tax benefits from share-based compensation | - | - | 10 | - | - | |||||||||||||||||
| Proceeds (repayment) of line of credit, net | 3,000 | - | - | - | (1,000 | ) | ||||||||||||||||
| Proceeds from long-term debt | - | - | 304 | 1,753 | - | |||||||||||||||||
| Repayment of long-term debt | (233 | ) | (128 | ) | (97 | ) | (93 | ) | (73 | ) | ||||||||||||
| Net cash provided by (used in) financing activities | 2,727 | (99 | ) | 217 | 1,660 | (1,135 | ) | |||||||||||||||
| Net increase (decrease) in cash | 3,217 | 218 | 2,899 | 1,741 | (4,182 | ) | ||||||||||||||||
| Cash at beginning of period | 11,592 | 11,374 | 8,475 | 6,734 | 10,916 | |||||||||||||||||
| Cash at end of period | $ | 14,809 | $ | 11,592 | $ | 11,374 | $ | 8,475 | $ | 6,734 | ||||||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||||||||||||
| Depreciation expense allocated to cost of services | $ | 1,186 | $ | 1,199 | $ | 1,252 | $ | 1,289 | $ | 1,283 | ||||||||||||
| Reclass of rental program property to (from) inventory, net | $ | 777 | $ | (279 | ) | $ | (719 | ) | $ | 1,374 | $ | 14 | ||||||||||
| * Accounts Receivable | ||||||||||||||||||||||
·Reclassification of cash provided by and included in accounts payable to accounts receivable | $ | - | $ | - | $ | 543 | $ | (10 | ) | $ | (479 | ) | ||||||||||
| * Accounts Payable | ||||||||||||||||||||||
·Reclassification of cash provided by and included in accounts payable to accounts receivable | $ | - | $ | - | $ | (543 | ) | $ | 10 | $ | 479 | |||||||||||
(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 | 442,968 | $ | 3,138 | 35,747,242 | $ | 224,874 | $ | (174,701 | ) | $ | 53,311 | ||||||||||
| Exercise of warrants | - | - | 11,000 | 29 | - | 29 | |||||||||||||||
| Stock based compensation | |||||||||||||||||||||
| 2013 Stock Incentive Plan | - | - | 88,678 | 302 | - | 302 | |||||||||||||||
| 2014 Stock Option Incentive Plan | - | - | - | 207 | - | 207 | |||||||||||||||
| Retirement of common stock | - | - | (12,746 | ) | (40 | ) | - | (40 | ) | ||||||||||||
| Net loss | - | - | - | - | (514 | ) | (514 | ) | |||||||||||||
| Balance, December 31, 2015 | 442,968 | $ | 3,138 | 35,834,174 | $ | 225,372 | $ | (175,215 | ) | $ | 53,295 | ||||||||||
(J) Reconciliation of Net 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) | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| (unaudited) | 2015 | 2015 | 2015 | 2015 | 2014 | ||||||||||||||||
| Net income (loss) | $ | (874 | ) | $ | 360 | $ | (201 | ) | $ | (567 | ) | $ | (261 | ) | |||||||
| Non-GAAP adjustments: | |||||||||||||||||||||
| Non-cash portion of income tax provision | 224 | 27 | 72 | 121 | 402 | ||||||||||||||||
| Fair value of warrant adjustment | 1,230 | (343 | ) | (263 | ) | 1,101 | (135 | ) | |||||||||||||
| Due Diligence/ Acquisition Costs | 106 | - | - | - | - | ||||||||||||||||
| Non-GAAP net income (loss) | $ | 686 | $ | 44 | $ | (392 | ) | $ | 655 | $ | 6 | ||||||||||
| Net income (loss) | $ | (874 | ) | $ | 360 | $ | (201 | ) | $ | (567 | ) | $ | (261 | ) | |||||||
| Cumulative preferred dividends | - | (332 | ) | - | (332 | ) | - | ||||||||||||||
| Net income (loss) applicable to common shares | $ | (874 | ) | $ | 28 | $ | (201 | ) | $ | (899 | ) | $ | (261 | ) | |||||||
| Non-GAAP net income (loss) | $ | 686 | $ | 44 | $ | (392 | ) | $ | 655 | $ | 6 | ||||||||||
| Cumulative preferred dividends | - | (332 | ) | - | (332 | ) | - | ||||||||||||||
| Non-GAAP net income (loss) applicable to common shares | $ | 686 | $ | (288 | ) | $ | (392 | ) | $ | 323 | $ | 6 | |||||||||
| Net earnings (loss) per common share - basic | $ | (0.02 | ) | $ | - | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.01 | ) | |||||||
| Non-GAAP net earnings (loss) per common share - basic | $ | 0.02 | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.01 | $ | - | |||||||||
| Basic weighted average number of common shares outstanding | 35,828,776 | 35,788,199 | 35,716,603 | 35,687,650 | 35,657,519 | ||||||||||||||||
| Net earnings (loss) per common share - diluted | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.01 | ) | ||||||
| Non-GAAP net earnings (loss) per common share - diluted | $ | 0.02 | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.01 | $ | - | |||||||||
| Diluted weighted average number of common shares outstanding | 35,828,776 | 36,427,683 | 35,716,603 | 35,687,650 | 35,657,519 | ||||||||||||||||
See discussion of Non-GAAP financial measures later in this document | |||||||||||||||||||||
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 or net cash used in operating activities. 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), and nonrecurring professional service fees recorded in SG&A that were incurred in connection with the VendScreen transaction. 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.
Adjusted EBITDA represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, nonrecurring professional service fees recorded in SG&A that were incurred in connection with the VendScreen transaction, 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 professional service fees incurred in connection with the VendScreen transaction in order to allow more accurate comparisons 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 and liquidity, and because it allows management and investors to consider the ongoing operations of the business both with, and without, such expenses.
F-USAT
View source version on businesswire.com: http://www.businesswire.com/news/home/20160212005183/en/
Contacts:
The Blueshirt Group
Mike Bishop, +1
415-217-4968
mike@blueshirtgroup.com
