Slide 1: Creating Value Through Innovation
Creating Value Through Innovation A Leader in Cashless Transactions, Networked Services, and Energy Management Investor Presentation December
Slide 2: Forward Looking Statements
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 presentation, including without limitation the financial position, business strategy and the plans and objectives of
Slide 3: Agenda
I. Introduction II. Who We Are and What We Do III. Strategic Positioning of USAT for Profitability and Sustainable Growth IV. The Board is in Place: Experienced and Committed to Enhancing Shareholder Value V. Dissidents are the Wrong Choice for Shareholders and Bring Little Experience VI. Conclusion
Slide 4: Introduction: USAT's Board and management plan
• USAT’s Board and management team have a sound strategic plan in place and have, on an ongoing basis, taken aggressive actions to increase productivity, reduce costs and position the Company for profitable and sustainable growth and success. • Our strategic plan calls for generating positive Net In
Slide 5: USA Technologies, Inc. founded in 1992
USA Technologies, Inc. founded in 1992. • The Company is recognized as a leading provider of wireless, cashless, micro-transactions and networking services to the unattended point of sale industries such as vending, kiosk and laundry. We are also a provider of energy saving technology to the cold be
Slide 6: Core products and technology platforms
USA Technologies has two core products/technology platforms that support our overall suite of services : • Networking for Data Management and Cashless Payment Processing • Energy Management . Ø Our networking platform enables PC and non-PC machines to be wirelessly connected to accept credit and deb
Slide 7: Our Products: $199 ePort
$199 $199 • Wireless, cashless transaction system • Fully integrated one-piece design • Compatible with pre-pay program available through First Data • Faster transaction processing due to a more powerful processor • Easier installation - - 5 minutes • Lower cost - designed to accelerate adoption Our
Slide 8: Our Products: ePort G8
$329 New ePort G8 • Wireless, cashless transaction system • Compatible with many more unattended point-of-sale appliances • 65% smaller than G7 making it easier to install • Compatible with pre-pay and GoTag program available through First Data • Combines traditional mag-stripe and RF payment capabi
Slide 9: Our Products: ePort SDK
ePort SDK The SDK (Software Development Kit) enables kiosks, toll booths, gaming units, venders, photo booths and other devices to accept cashless payment. • End-to-end encryption • Compatible with any Windows or Unix platform parent applications • PCI DSS compliant. • Alternative to Point-Of-Sale (
Slide 10: Projected Customer Economics: energy management
• Less than 1 year payback • Saves up to 40% of electric bill per unit • Average electric bill/unit ~ $300 per year • Average sales price of $90.00 • Initial market is U.S. potential install base of 4 million refrigerated beverage vending machines Projected Customer Economics Our Products
Slide 11: Projected Customer Economics: laundry
• Less than 1 year payback • 15% increase in sales • Insulate contracts/gain share • Hardware cost $200/unit • $2.50/month/unit network service contract per washer and dryer. Projected Customer Economics Online availability of washers and dryers. Payments via student ID or PIN“Cycle Done” notificati
Slide 12: PCI compliant suite of cashless payment services
A PCI compliant, end-to-end, suite of cashless payment and telemetry services tailored to fit the needs of self-service retail industries. Card Processing Services Wireless Connectivity Consumer Services Online Sales Reporting Health Alerts Data Security Over the Air Updates & DEX Data Management Se
Slide 13: Strategic Plan
Generate positive Net Income by the quarter ending December 31, 2010 Focus on increasing revenues, while also reducing costs Continue to develop and innovate new products and services Focus on generating value for our customers Add new highly qualified directors to our Board Our number one priority
Slide 14: Strategic Plan: Elements of the Plan
Leveraging our Existing Customers/Partners Focusing on Diversifying our Customer Portfolio Expanding Distribution in Core Markets Improving Scalability Providing Innovative Products and Services Leveraging Intellectual Property Improving Profit Margins Increasing Revenues Reducing Cost of Sales Redu
Slide 15: Our Strategy IS Working
Cash at the end of the last quarter ended September 30, 2009 was $16.7 million. Virtually debt free. Successful launch of the innovative ePort G8™ and ePort EDGE™, both lower-cost, and more efficient cashless payment products. A diversified and global base of approximately 700 customers has the stre
Slide 16: Our Strategy IS Working: installed base and transactions
Increased the installed base of devices connected to the USALive® Network by 36% to 57,000 in Q1 fiscal 2010, compared to Q1 fiscal 2009. This followed a 37% year-over-year increase in installed base in FY 2009 compared with FY 2008. Increased the number of transactions processed to 7.4 million in Q
Slide 17: Our Strategy IS Working: margins and expenses
Improved gross margin percentage on equipment sales in the first quarter of 2010 to 32% from 30% a year ago. Further reduced our SG&A expenses in Q1 FY 2010 by 20% from a year ago. Increased our revenues in Q1 of FY 2010 to $3.8 million, the highest level in five quarters. Reduced operating expenses
Slide 18: FOODBUY agreement with Compass Group
• On June 30, 2009 USA Technologies (USAT) entered into a 3-year agreement with FOODBUY, a procurement company affiliated with Compass Group USA—the largest independent vending operator in the US—as the preferred provider of credit/debit vending system and DEX telemetry hardware, as well as backend
Slide 19: USAT Results to Date: installed base
USA Technologies has approximately 700 distinct customers (e.g. bottlers, operators) with approximately 60,000 terminals on the ePort Connect Service. Cashless Terminals Installed Base by Quarter USAT Results to Date
Slide 20: USAT Results to Date: transaction volume
USA Technologies is processing 7.4M transactions per quarter for its customers. Transaction Volume by Quarter $10 M $7.5 M $5 M $2.5 M $12.5 M USAT Results to Date
Slide 21: Key Industry Trends
Operator Demand Consumer Demand • Focus on convenience • Desire for electronic micro- payments • 24/7 availability • Key to increase profit margin • Meeting their customer’s demand • Wireless connectivity provides additional operational benefits Market Sponsorship Technology Improvements • Wireless
Slide 22: USAT Results: Nilson Report ranking
Nilson Report named USAT as #6 in U.S. for Point of Sale Terminal shipments. USAT Results
Slide 23: Roadmap to Profitability
Given the trends in the marketplace and as seen through the Company’s own data, management anticipates achieving the following milestones as our installed base continues to increase: • Quarter ending March 31, 2010 - Connections to the network are anticipated to be 71,000 by the end of the quarter.
Slide 24: Projected Cashless Terminals Installed Base by Quarter
120,000 114,000 95,000 81,000 ; i; 12/31/09 71,000 3/31/10 6/30/10 9/30/10 12/31/10 Projected Cashless Terminals Installed Base by Quarter Positive Net Income Projected by December 31, 2010 °
Slide 25: Our Company is Exceptionally Well-positioned for a Bright Future
• Vastly expanded market with limited competition • World class products and services to address market needs • Positive results for partners and customers • Rising revenues, margins and reduced SG&A • 71 patents issued to protect the Company’s IP • Diversified product line, customer base and revenu
Slide 26: George R. Jensen, Jr., Chairman and CEO
George R. Jensen, Jr., Chairman of the Board and Chief Executive Officer Mr. Jensen has been the Chief Executive Officer and Director of USA Technologies since January 1992. He is the founder, and was Chairman, Director, and Chief Executive Officer of American Film Technologies, Inc. ("AFT") from 19
Slide 27: Committed and Engaged Board
Committed and Engaged Board Douglas M. Lurio, Director Mr. Lurio joined the Board of Directors in June 1999. He is President of Lurio & Associates, P.C.. He specializes in the practice of corporate and securities law. Previously he was a partner with Dilworth, Paxson LLP. Mr. Lurio received a Bachel
Slide 28: The USAT Board is the Right Board
• Active and Engaged Board that Adds Value. Board has a detailed understanding of the strategic plan in place which is aimed at maximizing value for all shareholders. - At a time when many businesses are faltering due to poor economic conditions, USAT has continued to produce steady and improved res
Slide 29: An Experienced Board and Management Team
We are positioned to continue executing our Strategic Plan with the help of: • A management team with industry expertise, market knowledge, ability to forge unique customer relationships and technological expertise to create and roll out products; • An independent and highly qualified Board of Direc
Slide 30: Setting the Record Straight
Setting the Record Straight The Dissidents Suggest That They Have a Better Plan To Generate Value for Shareholders - They Do Not . The Dissidents have no credible business plan for USAT’s continued growth, except for a poor and ill-informed set of “bullet points”, including a reference to the need t
Slide 31: Dissident nominees' backgrounds
Bradley Tirpak Settled Securities Fraud Action and Has No Public Company Leadership Mr. Tirpak is a former hedge fund manager. Mr. Tirpak was one of two defendants in a class action lawsuit alleging securities fraud that was settled through the payment of $2,250,000. See: “ http://www.usatech.com/dl
Slide 32: The Choice is Clear
The Choice is Clear • The strategic plan we are executing is evidence of our commitment to grow shareholder value. • We have a skilled, highly professional and experienced team in place to accomplish this. • We have increased our customer base to approximately 700 customers, servicing approximately
Slide 33: Conclusion and Recommendation
• USA Technologies is extremely well-positioned for sustainable, long-term growth • The Company has built momentum to become profitable and report positive Net Income in the quarter ending December 31, 2010 • Management and the Board of Directors are committed and engaged to increase revenues and pr