USA TECHNOLOGIES, INC. (NASDAQ:USAT) Files An 8-K Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

(a) On February 14, 2020, the Board of Directors (the “Board”) of USA Technologies, Inc. (the “Company”), upon the recommendation of the Audit Committee of the Board (the “Audit Committee”), and following discussions with management, determined that the unaudited consolidated financial statements for the fiscal quarter ended September 30, 2019 should no longer be relied upon. Similarly, related press releases, earnings releases, and investor communications describing the Company’s financial statements for that period should no longer be relied upon.

The determination of the Board to restate the above-referenced financial statements was based upon certain adjustments to its financial statements that were identified by management during the course of preparing the Company’s financial statements for the fiscal quarter ended December 31, 2019. These adjustments consisted primarily of the following: (i) incorrect allocation of transaction price between equipment revenues and license and transaction fees in connection with a customer contract which resulted in the inappropriate deferral of equipment revenues on hardware devices shipped during the three months ended June 30, 2019 and the three months ended September 30, 2019; and (ii) inaccurate accounting treatment of the leasing/rental contracts of its wholly-owned subsidiary, Cantaloupe Systems, Inc., relating primarily to the fiscal year ended June 30, 2019 and the three months ended September 30, 2019, which affected cost of sales, inventory and property, plant and equipment. These adjustments do not relate to the Audit Committee’s internal investigation which was substantially completed in January 2019. In addition, the Company identified other miscellaneous immaterial adjustments relating to the inaccurate accounting for: a customer rebate; certain accrued expenses; timing of hardware revenue recognition for a specific contract; timing of recognition for activation revenue; and timing of recognition for certain license and transaction fees.

Following the filing of this Current Report on Form 8-K, the Company will sequentially file an Amendment No. 1 to its previously filed Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2019 (the “Form 10-Q/A”), and then its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2019. The Form 10-Q/A contains the restatements of the Company’s unaudited consolidated financial statements for the fiscal quarter ended September 30, 2019, and additional data regarding these restatements.

The Company also analyzed the impact of the aforementioned adjustments and other accumulated misstatements on the financial statements for the interim and annual periods prior to the fiscal quarter ended September 30, 2019, and concluded that a correction of the errors would not be material individually or in the aggregate to any such prior interim or annual period. However, the Company concluded that correcting the cumulative impact of the errors would be material to its results of operations for the three months ended December 31, 2019 and fiscal year 2020. Accordingly, the Company has also included in the Form 10-Q/A the revised prior period interim and annual financial information for the fiscal year ended June 30, 2019 which reflects the correction of these errors and other accumulated misstatements.

The Audit Committee has discussed the matters disclosed to this Item 4.02(a) with the Company’s independent auditor, BDO USA LLP.

About USA TECHNOLOGIES, INC. (NASDAQ:USAT)

USA Technologies, Inc. provides technology-enabled solutions and value-added services that facilitate electronic payment transactions within the unattended point of sale (POS) market. The Company is a provider in the small ticket, beverage and food vending industry and is also engaged in offering solutions and services to other unattended market segments, such as amusement, commercial laundry, kiosk and others. It has designed and marketed systems and solutions that facilitate electronic payment options, as well as telemetry and machine-to-machine (M2M) services, which include the ability to remotely monitor, control and report on the results of distributed assets containing its electronic payment solutions. The Company derives its revenues from license and transaction fees resulting from connections to, as well as services provided by, its ePort Connect service.

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