(a) On October 7, 2019, 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 following financial statements previously issued by the Company should no longer be relied upon: (1) the audited consolidated financial statements for the fiscal year ended June 30, 2015; (2) the audited consolidated financial statements for the fiscal year ended June 30, 2016; and (3) the unaudited consolidated financial statements for the fiscal quarters and year-to-date ended September 30, 2016, December 31, 2016, and March 31, 2017. Similarly, related press releases, earnings releases, and investor communications describing the Company’s financial statements for these periods should no longer be relied upon.
The Annual Report on Form 10-K for the fiscal year ended June 30, 2019 (the “2019 Form 10-K”), which has been previously filed on the date hereof, contains restatements of (i) the Company’s selected financial data as of and for the fiscal year ended June 30, 2015 in Item 6 thereof; (ii) the Company’s selected financial data as of and for the fiscal year ended June 30, 2016 contained in Item 6 thereof; and (iii) the Company’s unaudited consolidated financial statements for the fiscal quarters and year-to-date ended September 30, 2016, December 31, 2016, and March 31, 2017, in Note 20, “Unaudited Quarterly Data” of the Notes to Consolidated Financial Statements, located in Item 8 thereof. The Company has not filed and does not intend to file amendments to any of its previously filed Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q for the periods affected by the foregoing restatements of its consolidated financial statements.
The determination of the Board to restate the above-referenced financial statements was based upon significant financial reporting issues which were identified during the audit process and which were not related to the previously completed Audit Committee internal investigation. These financial reporting issues resulted in further adjustments to the Company’s previously issued or prior years’ unissued financial statements, and related to revenue recognition, deferred income tax accounting, sales tax reserves, reserves for bad debts, inventory reserves, sale-leaseback accounting, balance sheet classification of preferred stock, and other matters.

Additional information regarding the aforementioned restatements and adjustments is contained in the 2019 Form 10-K, including in the Explanatory Note, Item 6, “Selected Financial Data,” Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Note 2, “Restatement of Consolidated Financial Statements” and Note 20, “Unaudited Quarterly Data” of the Notes to Consolidated Financial Statements in Item 8, and Item 9A, “Controls and Procedures”.
The Audit Committee has discussed the matters disclosed to this Item 4.02(a) with the Company’s former independent auditor, RSM US LLP, and current 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.