USA Technologies Reports Third Quarter Fiscal 2009 Results

MALVERN, Pa.--(Business Wire)--
USA Technologies (NASDAQ:USAT), a leading supplier of networked devices and
wireless non-cash transactions, associated financial/network services and energy
management, reported its financial results for its third fiscal quarter 2009
ended March 31, 2009.

Highlights for the Quarter

* Increased the number of devices connected to its USALive network to 48,000,
compared with approximately 31,000 devices at the end of last year`s third
fiscal quarter;
* Increased the number of transactions processed, in quarter, to approximately
5.7 million totaling more than $11.2 million, compared with approximately 3.2
million transactions totaling more than $8.9 million during last year`s third
fiscal quarter, an increase of 78% in transaction volume and 26% in dollars
processed;
* Launched ePort G8, an improved and lower-cost version of the ePort "G" Series
product;
* Neared completion of the new ePort Edge product, which, at $199 will provide a
faster return on investment for our customers that implement cashless payment
capabilities;
* Expanded into the $4 billion office coffee industry;
* Completed a series of improvements to Company`s ePort Connect Service;
* Reduced selling, general and administrative expenses by $637,047, or 15%, to
$3,755,245 for the quarter ended March 31, 2009 compared to the quarter ended
March 31, 2008.

Management Discussion

George Jensen, Chairman and Chief Executive Officer of USA Technologies said,
"With the launch of our new ePort G8 product, and nearing completion of the
ePort Edge product, USA Technologies has entered a new paradigm in its
development. With limited competition, we have expanded into new markets,
upgraded our products and services and created value for our customers and
partners. In addition, we took measures this quarter to further reduce costs,
and this coupled with our new products, we believe position the Company for
growth in fiscal 2010, despite the global economic downturn."

Mr. Jensen added, "We have also begun to benefit from customer agreements,
including our agreements with AIR-Serv, Merit Entertainment and a NYSE-listed
bottler company, which name USAT as the exclusive provider of cashless payment
services for each of these clients. Additionally, capitalizing on our experience
in the university market, we launched eSuds Credit, a unique laundry service
operating commercially, in a modern high-rise apartment complex in the center of
Washington, D.C. Based upon its initial success, we look forward to expanding
the eSuds service to other multi-unit housing developments, and eliminating the
seasonality factor from a product that was once previously targeted to
universities."

"With the accelerated trend towards cashless transactions, our new products and
services, our pursuit of new markets that augment our current strategic
partnerships with diverse, global, market leaders and our reduced expenses, we
are very excited about the Company`s future."

Financial Results

Fiscal 2009 third quarter ended March 31, 2009 total revenues were $2,308,932
compared with $4,263,512 for the fiscal 2008 third quarter ended March 31, 2008.
License and transaction fees increased 37% to $1,425,614 for the fiscal 2009
third quarter, compared with $1,043,115 in the comparable fiscal 2008 third
quarter. Equipment sales were $883,318 for the quarter ended March 31, 2009, a
decrease of $2,337,079 compared with $3,220,397 for the quarter ended March 31,
2008. The increase in license and transaction fees was primarily due to the
increase in the number of units on the Company`s USALive network. The decrease
in equipment revenue was related to key customers awaiting the availability of
our new ePort G8 and ePort Edge products, as well as a decrease in capital
spending by some of our customers due to the current economic slowdown. The
ePort G8 product became available for sale at the end of the third quarter, so
it had little impact on revenue during the third quarter and ePort Edge is
expected to be launched during the fourth quarter 2009.

During the third quarter of fiscal 2009, the Company processed approximately 5.7
million transactions totaling over $11.2 million as compared with approximately
3.2 million transactions totaling over $8.9 million during the corresponding
quarter of fiscal 2008, an increase of 78% in transaction volume and 26% in
dollars processed.

Gross profit for the third quarter of fiscal 2009 was $591,184, compared with a
gross profit of $895,722 for the corresponding quarter in the previous fiscal
year, while gross profit margins increased to 26% from 21% during last year`s
third quarter. The decrease in gross profit is primarily the result of a
decrease in sales of both energy conservation equipment as well as ePort vending
equipment, which was related to customers awaiting the availability of the new
generation ePort products. The increase in gross profit margins was due to an
increase in the profit margin of ePort vending equipment sales, mainly as a
result of lower production costs from offshore production.

Operating expenses for the third quarter of fiscal 2009 declined 15% to
$4,136,633 compared with $4,882,385 in the fiscal 2008 third quarter. The
overall decrease was mainly due to decreases in selling, general and
administrative expenses, principally due to decreases in compensation and
consulting expenses as a result of the Company`s cost reductions measures
implemented in fiscal 2008 third and fourth quarters.

Net loss applicable to common shares for the 2009 fiscal third quarter was
$3,913,256 or $0.26 per share, compared with $4,150,840, or $0.28 per share
reported in the third quarter fiscal 2008.

As of March 31, 2009, the Company had $8,440,255 in cash and cash equivalents.

About USA Technologies:

USA Technologies is a leader in the networking of wireless non-cash
transactions, associated financial/network services and energy management. USA
Technologies provides networked credit card and other non-cash systems in the
vending, commercial laundry, hospitality and digital imaging industries. The
Company has agreements with AT&T, Honeywell, Blackboard, MasterCard and others.
For further information on USA Technologies, please visit www.usatech.com. To
view a Company overview presentation, visit
http://www.usatech.com/company_info/dl/USAT_company_overview.pdf

Statement under the Private Securities Litigation Reform Act:

With the exception of the historical information contained in this release, the
matters described herein contain forward-looking statements that involve risk
and uncertainties that may individually or mutually impact the matters herein
described, including but not limited to, product acceptance, the ability to
continually obtained increased orders of its products, the ability to meet
installation goals, economic, competitive, governmental impacts, whether pending
patents will be granted or defendable, validity of intellectual property and
patents, the ability to license patents, the ability to commercialize
developmental products, as well as technological and/or other factors.

(FINANCIAL TABLES FOLLOW)

USA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three months ended March 31, Nine months ended March 31,
2009 2008 2009 2008

Revenues:
Equipment sales $ 883,318 $ 3,220,397 $ 4,166,927 $ 8,501,722
License and transaction fees 1,425,614 1,043,115 4,207,113 2,576,849
Total revenues 2,308,932 4,263,512 8,374,040 11,078,571

Cost of equipment 608,943 2,563,596 2,939,529 6,592,088
Cost of services 1,108,805 804,194 3,274,789 2,028,675
Cost of sales 1,717,748 3,367,790 6,214,318 8,620,763
Gross profit 591,184 895,722 2,159,722 2,457,808

Operating expenses:
Selling, general and administrative 3,755,245 4,392,292 11,971,078 14,226,973
Depreciation and amortization 381,388 490,093 1,188,420 1,497,768
Total operating expenses 4,136,633 4,882,385 13,159,498 15,724,741
Operating loss (3,545,449 ) (3,986,663 ) (10,999,776 ) (13,266,933 )

Other expense:
Interest income 38,700 264,567 263,237 716,120
Interest expense (23,804 ) (38,450 ) (76,942 ) (112,388 )
Total other income 14,896 226,117 186,295 603,732
Net loss (3,530,553 ) (3,760,546 ) (10,813,481 ) (12,663,201 )
Cumulative preferred dividends (382,703 ) (390,294 ) (772,997 ) (780,588 )
Loss applicable to common shares $ (3,913,256 ) $ (4,150,840 ) $ (11,586,478 ) $ (13,443,789 )

Loss per common share (basic and diluted) $ (0.26 ) $ (0.28 ) $ (0.76 ) $ (0.97 )

Weighted average number of common shares outstanding (basic and diluted) 15,345,492 15,023,313 15,236,442 13,837,206

USA TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS

March 31, June 30,
2009 2008
Assets (Unaudited)
Current
assets:
Cash and cash $ 8,440,255 $ 9,970,691
equivalents
Accounts 1,767,200 3,483,666
receivable,
less
allowance for
uncollectible
accounts of
approximately
$157,000 at
March 31,
2009 and
$215,000 at
June 30, 2008
Finance 281,493 399,427
receivables
Inventory, 2,310,164 2,299,002
net
Prepaid 759,255 802,223
expenses and
other current
assets
Total current 13,558,367 16,955,009
assets

Available-for - 6,875,000
-sale
securities
Finance 184,728 424,336
receivables,
less current
portion
Property and 2,149,059 2,024,842
equipment,
net
Intangibles, 5,103,653 5,885,432
net
Goodwill 7,663,208 7,663,208
Other assets 229,561 227,824
Total assets $ 28,888,576 $ 40,055,651

Liabilities
and
shareholders`
equity
Current
liabilities:
Accounts $ 3,104,318 $ 4,005,549
payable
Accrued 2,128,694 2,506,035
expenses
Current 567,311 526,348
obligations
under long
-term debt
Total current 5,800,323 7,037,932
liabilities

Long-term 396,629 441,170
debt, less
current
portion
Total 6,196,952 7,479,102
liabilities

Commitments
and
contingencies
(Note 6)

Shareholders`
equity:
Preferred
stock, no par
value:
Authorized
shares-
1,800,000
Series A
convertible
preferred-
Authorized
shares
900,000;
Issued and 3,614,554 3,686,218
outstanding
shares-
510,270 at
March 31,
2009 and
520,392 at
June 30, 2008
(liquidation
preference of
$15,451,307
and
$14,977,220,
respectively)
Common stock,
no par value:
Authorized
shares-
640,000,000;
Issued and 194,749,708 193,733,104
outstanding
shares-
15,336,722 at
March 31,
2009 and
15,155,270 at
June 30, 2008
Accumulated (175,672,638 ) (164,842,773 )
deficit
Total 22,691,624 32,576,549
shareholders`
equity
Total $ 28,888,576 $ 40,055,651
liabilities
and
shareholders`
equity

USA Technologies Contacts:
George Jensen, Chairman & CEO
(800) 633-0340
or
Stephen P. Herbert, President & COO
(800) 633-0340
e-mail: sherbert@usatech.com
or
Investor Relations Contact:
Porter, LeVay & Rose
Marlon Nurse, Vice President
(212) 564-4700

Copyright Business Wire 2009