x
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QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
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o
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF
1934
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Pennsylvania
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23-2679963
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification
No.)
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100 Deerfield Lane, Suite 140, Malvern,
Pennsylvania
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19355
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(Address
of principal executive offices)
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(Zip
Code)
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PAGE NO.
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Part I - Financial
Information
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Item
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1.
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Condensed
Financial Statements (Unaudited)
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3
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4
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5
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6
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7
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2. |
15
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3.
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20
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4T.
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20
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Part II - Other
Information
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Item
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2.
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21
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5. | Other Information |
22
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6.
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22
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23
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USA Technologies, Inc.
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Consolidated
Balance Sheets
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December
31,
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June
30,
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|||||||
2008
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2008
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|||||||
Assets
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(Unaudited)
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|||||||
Current
assets:
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||||||||
Cash
and cash equivalents
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$ | 6,111,637 | $ | 9,970,691 | ||||
Available-for-sale
securities
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4,850,000 | - | ||||||
Accounts
receivable, less allowance for uncollectible accounts of
approximately $92,000 at December 31, 2008
and $215,000 at June 30, 2008
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909,460 | 3,483,666 | ||||||
Finance
receivables
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324,257 | 399,427 | ||||||
Inventory,
net
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2,481,791 | 2,299,002 | ||||||
Prepaid
expenses and other current assets
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644,074 | 802,223 | ||||||
Total
current assets
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15,321,219 | 16,955,009 | ||||||
Available-for-sale
securities
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- | 6,875,000 | ||||||
Finance
receivables, less current portion
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253,343 | 424,336 | ||||||
Property
and equipment, net
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2,293,635 | 2,024,842 | ||||||
Intangibles,
net
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5,362,253 | 5,885,432 | ||||||
Goodwill
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7,663,208 | 7,663,208 | ||||||
Other
assets
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240,365 | 227,824 | ||||||
Total
assets
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$ | 31,134,023 | $ | 40,055,651 | ||||
Liabilities
and shareholders’ equity
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Current
liabilities:
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Accounts
payable
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$ | 2,505,270 | $ | 4,005,549 | ||||
Accrued
expenses
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1,446,613 | 2,506,035 | ||||||
Current
obligations under long-term debt
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690,665 | 526,348 | ||||||
Total
current liabilities
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4,642,548 | 7,037,932 | ||||||
Long-term
debt, less current portion
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496,372 | 441,170 | ||||||
Total
liabilities
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5,138,920 | 7,479,102 | ||||||
Commitments
and contingencies (Note 6)
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Shareholders’
equity:
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Preferred
stock, no par value:
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Authorized
shares- 1,800,000
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Series
A convertible preferred- Authorized shares-900,000;
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Issued
and outstanding shares- 510,270 at December 31, 2008 and 520,392 at June
30, 2008 (liquidation preference of $15,098,161 and $14,977,220,
respectively)
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3,614,554 | 3,686,218 | ||||||
Common
stock, no par value:
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Authorized
shares- 640,000,000;
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Issued
and outstanding shares- 15,275,527 at December 31, 2008 and 15,155,270 at
June 30, 2008
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194,522,634 | 193,733,104 | ||||||
Accumulated
deficit
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(172,142,085 | ) | (164,842,773 | ) | ||||
Total
shareholders’ equity
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25,995,103 | 32,576,549 | ||||||
Total
liabilities and shareholders’ equity
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$ | 31,134,023 | $ | 40,055,651 | ||||
See
accompanying notes.
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USA Technologies, Inc.
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Consolidated
Statements of Operations
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(Unaudited)
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Three
months ended
December
31,
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Six
months ended
December
31,
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2008
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2007
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2008
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2007
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Revenues:
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Equipment
sales
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$ | 1,244,694 | $ | 2,631,061 | $ | 3,283,609 | $ | 5,281,325 | ||||||||
License
and transaction fees
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1,425,535 | 828,342 | 2,781,499 | 1,533,734 | ||||||||||||
Total
revenues
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2,670,229 | 3,459,403 | 6,065,108 | 6,815,059 | ||||||||||||
Cost
of equipment
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896,742 | 1,756,000 | 2,330,586 | 4,028,492 | ||||||||||||
Cost
of services
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1,108,358 | 660,493 | 2,165,984 | 1,224,481 | ||||||||||||
Cost
of sales
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2,005,100 | 2,416,493 | 4,496,570 | 5,252,973 | ||||||||||||
Gross
profit
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665,129 | 1,042,910 | 1,568,538 | 1,562,086 | ||||||||||||
Operating
expenses:
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Selling,
general and administrative
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3,776,302 | 4,442,646 | 8,215,833 | 9,834,680 | ||||||||||||
Depreciation
and amortization
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388,252 | 507,048 | 807,032 | 1,007,675 | ||||||||||||
Total
operating expenses
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4,164,554 | 4,949,694 | 9,022,865 | 10,842,355 | ||||||||||||
Operating
loss
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(3,499,425 | ) | (3,906,784 | ) | (7,454,327 | ) | (9,280,269 | ) | ||||||||
Other
expense:
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Interest
income
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96,572 | 302,661 | 224,537 | 451,553 | ||||||||||||
Interest
expense
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(26,180 | ) | (35,543 | ) | (53,138 | ) | (73,939 | ) | ||||||||
Total
other income
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70,392 | 267,118 | 171,399 | 377,614 | ||||||||||||
Net
loss
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(3,429,033 | ) | (3,639,666 | ) | (7,282,928 | ) | (8,902,655 | ) | ||||||||
Cumulative
preferred dividends
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- | - | (390,294 | ) | (390,294 | ) | ||||||||||
Loss
applicable to common shares
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$ | (3,429,033 | ) | $ | (3,639,666 | ) | $ | (7,673,222 | ) | $ | (9,292,949 | ) | ||||
Loss
per common share (basic and diluted)
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$ | (0.23 | ) | $ | (0.25 | ) | $ | (0.51 | ) | $ | (0.70 | ) | ||||
Weighted
average number of common shares outstanding (basic and
diluted)
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15,196,988 | 14,469,667 | 15,183,102 | 13,250,598 | ||||||||||||
See
accompanying notes.
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USA Technologies, Inc.
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Consolidated
Statement of Shareholders’ Equity
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(Unaudited)
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Series
A Convertible Preferred Stock
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Common
Stock
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Accumulated
Deficit
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Total
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Balance,
June 30, 2008
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$ | 3,686,218 | $ | 193,733,104 | $ | (164,842,773 | ) | $ | 32,576,549 | |||||||
Retirement
of 135,744 shares of common stock
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- | (315,304 | ) | - | (315,304 | ) | ||||||||||
Retirement
of 10,122 shares of preferred stock
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(71,664 | ) | - | (16,384 | ) | (88,048 | ) | |||||||||
Issuance
of 49,390 fully-vested shares of common stock to employees and vesting of
shares granted under the 2007-A Stock Compensation Plan
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- | 274,423 | - | 274,423 | ||||||||||||
Issuance
of 72,000 fully-vested shares of common stock to officers and vesting
of shares granted under the 2008 Stock Incentive
Plan
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- | 563,881 | - | 563,881 | ||||||||||||
Issuance
of 134,611 shares of common stock for settlement of the Long-Term Equity
Incentive Program liability for Fiscal Year 2008
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- | 266,530 | - | 266,530 | ||||||||||||
Net
loss
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- | - | (7,282,928 | ) | (7,282,928 | ) | ||||||||||
Balance,
December 31, 2008
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$ | 3,614,554 | $ | 194,522,634 | $ | (172,142,085 | ) | $ | 25,995,103 | |||||||
See
accompanying notes.
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USA Technologies, Inc.
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Consolidated
Statements of Cash Flows
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(Unaudited)
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Six
months ended
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December
31,
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2008
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2007
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Operating
activities
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Net
loss
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$ | (7,282,928 | ) | $ | (8,902,655 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
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Charges
incurred in connection with the vesting and issuance of common stock for
employee and officer compensation
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838,304 | 102,741 | ||||||
Charges
incurred (reduced) in connection with the Long-term Equity Incentive
Program
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(268,407 | ) | 1,247,089 | |||||
Charges
incurred in connection with stock options
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- | 60,554 | ||||||
Bad
debt expense (recovery)
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(27,380 | ) | 125,711 | |||||
Amortization
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523,179 | 618,300 | ||||||
Depreciation,
$41,667 of which is allocated to cost of services for the six months
ended December 31, 2008
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325,520 | 389,375 | ||||||
Changes
in operating assets and liabilities:
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Accounts
receivable
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2,601,586 | (1,483,812 | ) | |||||
Finance
receivables
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246,163 | (155,140 | ) | |||||
Inventory
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(182,789 | ) | 577,786 | |||||
Prepaid
expenses and other assets
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408,822 | (657,739 | ) | |||||
Accounts
payable
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(1,500,279 | ) | 1,601,105 | |||||
Accrued
expenses
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(524,485 | ) | 212,405 | |||||
Net
cash used in operating activities
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(4,842,694 | ) | (6,264,280 | ) | ||||
Investing
activities
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Purchase
of property and equipment, net
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(170,100 | ) | (403,939 | ) | ||||
Net
proceeds from redemption/sale of available-for-sale
securities
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2,025,000 | 6,350,000 | ||||||
Net
cash provided by investing activities
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1,854,900 | 5,946,061 | ||||||
Financing
activities
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Net
proceeds from the issuance (payments for retirement) of common
stock
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(315,304 | ) | 19,069,965 | |||||
Payments
for retirement of preferred stock
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(88,048 | ) | - | |||||
Proceeds
from the issuance of long-term debt
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- | 332,740 | ||||||
Repayment
of long-term debt
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(467,908 | ) | (373,235 | ) | ||||
Net
cash provided by (used in) financing activities
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(871,260 | ) | 19,029,470 | |||||
Net
increase (decrease) in cash and cash equivalents
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(3,859,054 | ) | 18,711,251 | |||||
Cash
and cash equivalents at beginning of period
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9,970,691 | 5,163,844 | ||||||
Cash
and cash equivalents at end of period
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$ | 6,111,637 | $ | 23,875,095 | ||||
Supplemental
disclosures of cash flow information:
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Prepaid
insurance financed with long-term debt
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$ | 225,785 | $ | 203,777 | ||||
Prepaid
maintenance contracts financed with long-term debt
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$ | 37,429 | $ | - | ||||
Cash
paid for interest
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$ | 54,351 | $ | 73,097 | ||||
Equipment
acquired under capital lease
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$ | 424,213 | $ | 63,925 | ||||
See
accompanying notes.
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December 31
|
June 30
|
|||||||
2008
|
2008
|
|||||||
(unaudited)
|
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Accrued
professional fees
|
$ | 474,410 | $ | 265,557 | ||||
Accrued
other
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325,804 | 226,427 | ||||||
Accrued
compensation and related sales commissions
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248,325 | 640,726 | ||||||
Accrued
taxes and filing fees
|
203,850 | 417,848 | ||||||
Accrued
share-based payment liability
|
107,458 | 755,489 | ||||||
Advanced
customer billings
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86,766 | 199,988 | ||||||
$ | 1,446,613 | $ | 2,506,035 |
December 31
|
June 30
|
|||||||
2008
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2008
|
|||||||
(unaudited)
|
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Capital
lease obligations
|
$ | 756,081 | $ | 561,286 | ||||
Loan
agreements
|
430,956 | 406,232 | ||||||
1,187,037 | 967,518 | |||||||
Less
current portion
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690,665 | 526,348 | ||||||
$ | 496,372 | $ | 441,170 |
Item 2.
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Management's
Discussion and Analysis of Financial Condition and Results of Operations
Forward
Looking
Statements
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Item 3.
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Quantitative
and Qualitative Disclosures About Market
Risk
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Item 4T.
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Controls
and Procedures
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Period
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Total
number of shares (1)
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Average
price paid per share
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Total
number of shares purchased as part of publicly announced plans or
programs
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Approximate
dollar value of shares that yet may be purchased under the plans or
programs (2)
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October
1 through October 31, 2008: Common Stock
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61,244 | $ | 3.055 | 61,244 | $ | 278,950 | ||||||||||
November
1 through November 30, 2008: Common Stock
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21,900 | 1.5463 | 21,900 | $ | 161,788 | |||||||||||
December
1 through December 31, 2008: Common Stock
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45,300 | 1.4379 | 45,300 | $ | 596,651 | |||||||||||
Total,
Common
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128,444 | $ | 2.2275 | 128,444 | $ | 596,651 | ||||||||||
October
1 through October 31, 2008: Preferred Stock
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500 | $ | 9.50 | 500 | $ | 278,950 | ||||||||||
November
1 through November 30, 2008: Preferred Stock
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9,622 | 8.657 | 9,622 | $ | 161,788 | |||||||||||
Total,
Preferred
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10,122 | $ | 8.6987 | 10,122 | $ | 596,651 |
Item
5.
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Other Information
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Certifications
of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934.
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Certifications
of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934.
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Certifications
by the Chief Executive Officer and Chief Financial Officer pursuant to 18
USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
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USA
TECHNOLOGIES, INC.
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Date: February
9, 2009
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/s/ George R. Jensen,
Jr.
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George
R. Jensen, Jr., Chairman and
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Chief
Executive Officer
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Date: February
9, 2009
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/s/ David M. DeMedio
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David
M. DeMedio,
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Chief
Financial Officer
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