Message #31 From:
NewsBot Date: December 6, 2006 07:36:00 AM
USAT News USA Technologies Issues Letter to Shareholders
MALVERN, Pa.--(BUSINESS WIRE)--USA Technologies (OTCBB:USAT) issued the following Letter to
Shareholders today:
Dear Shareholder:
Since I last wrote to you in July, USA Technologies has announced record
revenue and gross profit for fiscal 2006, and again for the first
quarter of fiscal 2007, ended September 30, 2006. In November we
announced the largest single e-Port® sale in
the Company’s history with MasterCard, which
between hardware and network service fees is expected to result in
revenue of nearly $4 million.
In just five months the Company has experienced its most exciting period
of growth and expansion to date, “Creating
Value Through Innovation™”– for our customers, business partners and
shareholders. And some of our growth is in the form of recurring
revenues, not only driven by hardware sales, but by installation and
monthly service fees. As we expand our installed base, our recurring
service fees will further increase, providing a stable and predictable
source of revenues.
Demand for our leading edge technologies, skills and services is growing
rapidly because they meet and deliver what the global marketplace wants
and needs today. And already we are designing new technologies to meet
the demands of tomorrow. Our e-Port is designed to accept payment by
Near Field Communications (NFC) enabled cellular phones, the next wave
in contactless payment. Click on the following link to see our G6 e-Port
accepting payment via a cell phone: http://www.usatech.com/imgs/e-port_g6_cellphone.jpg.
Successive Record Business Results
We closed fiscal year 2006 on June 30th, recording revenue of $6.4
million, a 37% increase over the previous year. Gross profit was $2
million, a 68% increase. The growth was primarily attributed to rapidly
increasing sales of the e-Port and EnergyMiser®
product lines.
Three months later we announced a record first quarter ended September
30 to kick off fiscal year 2007. Revenue totaled $2 million, an increase
of 47% over the corresponding period of the prior fiscal year. Gross
profit was $615,536, up 95%, and gross margin improved to 31%. e-Port
revenues totaled $909,000 for the quarter, an increase of 159% over the
same quarter last year. The strong results were influenced by the launch
of the e-Port Generation Six (G6), our cashless and contactless payment
solution for vending machines integrating new radio frequency (RFID)
contactless card capability with magnetic-swipe card technology.
“Creating Value Through Innovation™”
Results in Historic Customer Wins
We are “Creating Value Through Innovation”
by rapidly evolving our e-Port product line to meet emerging market
trends. The multi-functional G6 represents the finest in creativity and
leading edge technology for the unattended point of sale market. This
product takes all forms of cashless payments, card and contactless, not
only for the vending marketplace, but for the unattended point-of-sale
industry. We accomplished the task quickly and efficiently, responding
immediately to market dynamics. Our speed and technology leadership have
led to recent historic customer wins, with more landmark opportunities
under development and in the pipeline.
Our technology expertise led to MasterCard installing our e-Port G6
technology in 1,000 Coca-Cola vending machines in Philadelphia and
surrounding tri-state area. In the past few weeks it resulted in the
historic contract with MasterCard for rapid deployment of an additional
5,000 G6 e-Ports in vending machines, point-of-sale terminals and kiosks
in another 12 cities across the United States by February 15, 2007. Both
rollouts represent the two biggest deployments of cashless technology in
the industry, and across the nation. Click on the following link to see
a picture of our G6 e-Port using the new contactless credit card: http://www.usatech.com/imgs/e-port_g6_paypass.jpg.
The self-service POS industry is largely untapped by cashless payment
companies. There are more than 30 million vending machines worldwide,
representing a business in excess of $100 billion. MasterCard is among
the first major card companies to break into it.
Bank of America, one of the world's largest financial institutions and
card issuing banks, is using our e-Port in a program to evaluate RFID
cashless payment devices. The bank has installed the e-Port G6 in
vending machines located in bank buildings, and employees are making
purchases using everything from traditional magnetic-swipe credit cards,
to key fobs, contactless “tap and go”
cards, and cellular phones equipped with the latest NFC wireless
technology.
And interest in our e-Port cashless and wireless technology is spreading
globally. We unveiled the G6 in Paris in November at CARTES 2006, the
world's largest trade show for the credit card industry. It was
showcased by two of our global business partners.
Helping to drive adoption of the newest e-Port has been our ability to
deliver great value to customers for less. Not only have we improved the
technology, but we have lowered the manufacturing cost and our retail
prices significantly, allowing our customers to realize an even faster
return on their investment.
Survey Supports Growing Sales Success
The fourth annual quantitative survey of the small payments market
conducted by Ipsos Insight and Peppercoin released at the 2006 Micro and
Small Payments Conference in New York City last week helps explain why
e-Port and e-Suds sales are accelerating in the first five months of
this fiscal year.
The survey reported that more than 67 million Americans used a credit or
debit card to make a purchase of less than $5.00 in November. Forty-two
million used a card to purchase coffee or a beverage, while 26 million
paid for subway tickets and tolls. The same survey found that 42 million
Americans were willing to use a card when making a purchase from a
vending machine. Thirty-two percent purchased a coffee or beverage at
least six times, and eleven percent purchased coffee or a beverage more
than 20 times. Fifteen percent purchased items from vending machines and
kiosks with their cards at least six times.
These surveys confirm that consumers are willing to use credit or debit
cards to buy soda, coffee and snacks, or pay tolls if the option is
available. The data also demonstrates that merchants, card issuers,
vending machine operators, and providers of cashless transaction
technology will benefit from giving consumers more opportunity to use
their cards and other cashless payment methods, and it’s
reflected in our recent business successes.
Further Business Highlights
Following are additional highlights of our business success over the
past six months:
Government Customers: We are working with the Commonwealth of
Pennsylvania to help implement an energy conservation program to install
EnergyMisers in vending machines and glass-front coolers located in
government buildings and the private sector state wide.
We are working with the Arizona State Government to install VendingMiser
on vending machines in General Services Department buildings. The
Arizona Department of Administration says it plans to install more in
other government buildings to help meet Governor Napolitano's goal to
significantly reduce energy consumption in government buildings and
lower greenhouse gas emissions by Arizona's centennial in 2012.
Installs of our EnergyMiser products are accelerating in federal, state
and local government buildings. The Denver Federal Building recently
converted its vending machines, and we are working with two major local
government utilities in northern and central Florida.
The City of Tucson, Arizona, is also installing EnergyMisers on vending
machines throughout the city.
These deployments come after 15 cities in the Los Angeles South Bay area
installed EnergyMiser in vending machines across the region, and plan to
install thousands more in 2007.
U.S. Coast Guard: The U.S. Coast Guard in San Francisco and
Oakland recently installed VendingMiser technology on vending machines
across both bases. It followed installations at Coast Guard bases in
Hawaii, and we have targeted more Coast Guard bases in 2007.
Defense Forces: EnergyMisers were installed at Fort Hood Army
Garrison, in Texas, the largest military base in America, and at the
Hawaii Army National Guard, in Honolulu. They followed installations at
the Adjunct General's Department, Texas; the Texas Air National Guard;
Burnsville Air Force Base; the U.S. Naval Academy; the Naval Exchange
Service; and the Naval Base Coronado and San Clement Island base,
California. We are also in negotiations with the U.S. Navy for further
base installs in the US, including Great Lakes base in Illinois.
USAT Rebate Program: The Wisconsin Focus on Energy became the 24th
State energy utility to join the USA Technologies, EnergyMiser®
rebate program, offering rebates ranging up to $45 for VendingMisers and
SnackMisers. Meanwhile, the Silicon Valley Power utility, already
participating in the program, is extending its rebates ranging up to
$120 for VendingMisers and CoolerMisers for another 12 months. We have
plans to expand the program in 2007.
e-Suds™ Deployment: We embarked on one
of our largest summer e-Suds online laundry service installations at six
new colleges and universities. The e-Suds service is now operational in
21 universities and colleges nationwide with several installations
planned for the upcoming holiday break.
PC Express®“Nomad™”:
We launched the first self-contained roving business center on wheels at
the New York International Hotel, Motel and Restaurant Show where it was
a finalist in the prestigious Editor's Choice Award, sponsored by the
International hospitality media. This mobile, public-access, on demand
personal computer, can be connected to the Internet by wireless, is
activated by credit card, and is powered by electricity or battery.
Click on the following link to see a picture of PC Express “Nomad”:
http://www.usatech.com/business_express/bex_nomad.php.
USAT Capital Corporation: We launched the USAT Capital Corp, LLC,
a financing subsidiary that allows customers to acquire our products
through rental or lease purchase financing. The LLC has a commitment
from a large financial institution to purchase its rental or lease
purchase contracts.
EnergyMiser® Conversion Program: To
help vending machine owners and operators capitalize on the new ENERGY
STAR Rebuilt Refrigerated Beverage Vending Machine Program sponsored by
the EPA, we launched the VendingMiser Conversion Program, a package of
services to help upgrade vending machines to meet ENERGY STAR standards.
There are four million installed refrigerated vending machines in the
U.S. alone, and approximately 200,000 are refurbished and remanufactured
each year. Our VendingMiser VM2IQ can help bring those 200,000 machines
up to ENERGY STAR compliance. It’s a
significant incentive that will drive sales of the “internal”
VM2IQ.
When I last wrote to report on progress, I indicated that coming
quarters and fiscal 2007 would be the most exciting for USA
Technologies, and that I would share with you the reasons why. I have
listed many of those reasons, and we anticipate that many more are
coming. I believe that we have reached an inflection point in the Company’s
growth and expansion.
Rich Pipeline of Future Business
We are demonstrating that our technology is, and will continue to play a
key role in the new paradigm for unattended commerce, in energy
conservation, and in the hospitality and laundry business. Major global
and household brand names have recognized our product line, and are
installing it. More expect to go operational soon.
As calendar 2006 draws to a close and as we enter 2007 we hope to
announce more exciting projects and programs with new customers in a
variety of exciting businesses, and with new partners to expand our
market reach. We plan to enter new markets and launch more new products
that further enhance the consumer’s
purchasing experience, strengthen our technological leadership and, most
importantly, reinforce our mission to “Create
Value Through Innovation.”
I would like to wish you and your family a happy holiday season and to
once again thank you for your support this year. Calendar year 2007 is
expected to be a very exciting year for the Company and its shareholders.
Sincerely,
George R. Jensen, Jr.,
Chairman and Chief Executive Officer
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. USA Technologies is an IBM Business Partner.
The Company has marketing agreements with Cingular Wireless, Honeywell,
Blackboard, and ZiLOG Corporation. For further information on USA
Technologies, please visit www.usatech.com
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, the
ability of the Company to increase revenues in the future due to the
developing and unpredictable markets for its products, the ability to
achieve a positive cash flow, the ability to obtain orders for its
products, the ability to obtain new customers and the ability to
commercialize its products, which could cause actual results or revenues
to differ materially from those contemplated by these statements.
