UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant X
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Filed by a Party other than the Registrant
-----
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6
(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ?240.14a-12
USA TECHNOLOGIES, INC.
----------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously filing by registration statement number, or the Form or Schedule and
the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[GRAPHIC OMITTED]
December __, 2003
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of USA Technologies, Inc. to be held at 10:00 a.m., January 16,
2004, at The Union League, 140 South Broad Street, Philadelphia, Pennsylvania
19102.
In connection with the Annual Meeting, enclosed herewith is
the Proxy Statement and Proxy. We are requesting your approval of a number of
proposals which are very important to the Company's future success. Therefore,
whether or not you expect to attend the meeting in person, it is imperative that
your shares be voted at the meeting. At your earliest convenience, please
complete, date and sign the Proxy and return it in the enclosed, postage-paid
envelope furnished for that purpose.
Following the consideration of the proposals by the
shareholders, management will present a current report on the activities of the
Company. At the meeting, we will welcome your comments on or inquiries about the
business of the Company that would be of interest to shareholders generally.
I look forward to seeing you at the Annual Meeting. In the
meantime, please feel free to contact me with any questions you may have.
Sincerely,
/s/ George R. Jensen, Jr.
George R. Jensen, Jr.
Chairman and Chief Executive Officer
USA TECHNOLOGIES, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 16, 2004
-------------------------
To Our Shareholders:
The Annual Meeting of Shareholders of USA Technologies, Inc.,
a Pennsylvania corporation (the "Company"), will be held at 10:00 a.m., January
16, 2004, at The Union League, 140 South Broad Street, Philadelphia,
Pennsylvania 19102, for the following purposes:
1. The election of George R. Jensen, Jr., Stephen P. Herbert,
William W. Sellers, William L. Van Alen, Jr., Steven Katz, and Douglas M. Lurio,
as Directors;
2. To act upon a proposal to ratify the appointment of Ernst &
Young LLP as the independent public accountants of the Company for fiscal 2004;
3. To act upon an amendment to increase the number of
authorized shares of Common Stock to 475,000,000; and
4. To transact such other business as may properly come before
the Annual Meeting and any and all adjournments thereof.
The Board of Directors has fixed the close of business on
December 12, 2003 as the record date for the determination of shareholders
entitled to notice of, and to vote at, the Annual Meeting and any and all
adjournments thereof.
You are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting in person, please promptly mark,
sign and date the enclosed proxy and return it in the envelope provided for that
purpose.
By Order of the Board of Directors,
/s/ George R. Jensen, Jr.
GEORGE R. JENSEN, JR.
Chairman and Chief Executive Officer
USA TECHNOLOGIES, INC.
PROXY STATEMENT
SOLICITATION OF PROXY, REVOCABILITY AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
USA Technologies, Inc., a Pennsylvania corporation (the "Company"), for use at
the 2004 Annual Meeting of Shareholders (the "Annual Meeting"), to be held at
10:00 a.m., on January 16, 2004, at The Union League, 140 South Broad Street,
Philadelphia, Pennsylvania 19102.
Only holders of Common Stock or Series A Convertible Preferred Stock of
record at the close of business on December 12, 2003 will be entitled to notice
of and to vote at the Annual Meeting. Each share of Common Stock and Series A
Preferred Stock is entitled to one vote on all matters to come before the Annual
Meeting. On December 12, 2003, the record date for the Annual Meeting, the
Company had issued and outstanding 285,341,570 shares of Common Stock, no par
value ("Common Stock"), and 528,287 shares of Series A Convertible Preferred
Stock, no par value ("Series A Preferred Stock").
The Company's principal executive offices are located at 100 Deerfield
Lane, Suite 140, Malvern, Pennsylvania 19355. The approximate date on which this
Proxy Statement and the accompanying proxy are first being sent to shareholders
is December __, 2003.
Quorum and Voting
The presence, in person or by proxy, of the holders of a majority of
the votes entitled to be cast by the shareholders entitled to vote generally at
the Annual Meeting is necessary to constitute a quorum. Votes withheld for
director nominees and abstentions on the other proposals to be considered at the
Annual Meeting will be counted in determining whether a quorum has been reached,
but the failure to execute and return a proxy will result in a shareholder not
being considered present at the meeting. The holders of the Common Stock and
Series A Preferred Stock vote together, and not as a separate class, on all
matters to be submitted to shareholders at the Annual Meeting. If a quorum is
not present at the Annual Meeting, we expect that the Annual Meeting will be
adjourned or postponed to solicit additional proxies.
Assuming the presence of a quorum, generally the adoption of a proposal
by the shareholders requires the affirmative vote of the holders of at least a
majority of all shares casting votes in person or by proxy at the Annual
Meeting. Directors are elected by a plurality, and the six nominees who receive
the most votes will be elected. Abstentions and broker non-votes will not be
taken into account to determine the outcome of the election of directors or the
approval of any proposal. Approval of the proposal to ratify the selection of
auditors will require the affirmative vote of the holders of at least a majority
of all shares casting votes in person or by proxy at the Annual Meeting.
Approval of the proposal to increase the number of authorized shares of Common
Stock will require the affirmative vote of the holders of at least a majority of
all shares casting votes in person or by proxy at the Annual Meeting. Only
shares affirmatively voted for a proposal, including properly executed proxies
that do not contain voting instructions, will be counted as favorable votes for
that proposal. Brokers who hold shares of stock in street name for customers and
who indicate on a proxy that the broker does not have discretionary authority to
vote those shares as to a particular matter are referred to as broker non-votes.
Broker non-votes will have no effect in determining whether a proposal will be
adopted at the Annual Meeting although they would be counted as present for
purposes of determining the existence of a quorum. Abstentions as to a
particular proposal will have the same effect as votes against such proposal.
Revocability of Proxies
Shares represented by proxies, if properly signed and returned, will be
voted in accordance with the specifications made thereon by the shareholders.
Any proxy not specifying to the contrary will be voted in favor of the adoption
of all of the proposals referred to in the Notice of Annual Meeting and for the
six nominees for Director listed in Item 1 below. A shareholder who signs and
returns a proxy may revoke it any time before it is voted by the filing of an
instrument revoking it or a duly executed proxy bearing a later date with the
Secretary of the Company. Your mere attendance at the Annual Meeting will not
revoke your proxy.
Solicitation
The cost of soliciting proxies will be borne by the Company. Such
solicitation will be made by mail and may also be made on behalf of the Company
by the Company's Directors, officers or employees in person or by telephone,
facsimile transmission or telegram.
SECURITY OWNERSHIP
Common Stock
The following table sets forth, as of June 30, 2003, the beneficial
ownership of the Common Stock of each of the Company's directors and executive
officers, the other employee named in the Summary Compensation Table set forth
below, as well as by the Company's directors and executive officers as a group.
Except as set forth below, the Company is not aware of any beneficial owner of
more than five percent of the Common Stock. Except as otherwise indicated, the
Company believes that the beneficial owners of the Common Stock listed below,
based on information furnished by such owners, have sole investment and voting
power with respect to such shares, subject to community property laws where
applicable.
Number of Shares
Name and Address of Common Stock Percent
of Beneficial Owner Beneficially Owned(1) of Class(2)
------------------- --------------------- --------
George R. Jensen, Jr. 2,266,000 shares(3) *
517 Legion Road
West Chester, Pennsylvania 19382
Stephen P. Herbert 1,186,050 shares(4) *
536 West Beach Tree Lane
Strafford, Pennsylvania 19087
Haven Brock Kolls, Jr. 103,825 shares(5) *
1573 Potter Drive
Pottstown, Pennsylvania 19464
Leland P. Maxwell 50 shares *
401 Dartmouth Road
Bryn Mawr, Pennsylvania 19010
Michael K. Lawlor 332,050 shares(6) *
131 Lisa Drive
Paoli, Pennsylvania 19301
Adele H. Hepburn 6,898,445 shares(7) 2.04%
208 St. Georges Road
Ardmore, Pennsylvania 19003
Douglas M. Lurio 421,463 shares(8) *
2005 Market Street, Suite 2340
Philadelphia, Pennsylvania 19103
William W. Sellers 1,833,812 shares(9) *
394 East Church Road
King of Prussia, Pennsylvania 19406
William L. Van Alen, Jr. 648,340 shares(10) *
Cornerstone Entertainment, Inc.
P.O. Box 727 Edgemont, Pennsylvania 19028
La Jolla Cove Investors, Inc. 28,736,059 shares(11) 8.50%
7817 Herschel Avenue, Suite 200
La Jolla, California 92037
Kazi Management VI Inc. 22,857,145 shares(12) 6.76%
30 Dronnigens Gade Ste B
St. Thomas, Virgin Islands 00802
All Directors and Executive Officers
As a Group (9 persons) 7,244,477 shares(13) 2.20%
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* Less than one percent (1%)
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and derives from either voting or investment
power with respect to securities. Shares of Common Stock issuable upon
conversion of the Preferred Stock, shares issuable upon the conversion of
Convertible Senior Notes, or shares of Common Stock issuable upon exercise of
warrants and options currently exercisable, or exercisable within 60 days of
June 30, 2003, are deemed to be beneficially owned for purposes hereof.
(2) On June 30, 2003 there were 218,741,042 shares of Common Stock and 524,492
shares of Series A Preferred Stock issued and outstanding. For purposes of
computing the percentages under this table, it is assumed that all shares of
issued and outstanding Preferred Stock have been converted into 524,492 shares
of Common Stock, that all of the options to acquire Common Stock which have been
issued and are fully vested as of June 30, 2003 (or within 60-days of June 30,
2003) have been converted into 2,907,485 shares of Common Stock. For purposes of
computing such percentages it has also been assumed that all of the remaining
Purchase Warrants have been exercised for 62,127,724 shares of Common Stock;
that all of the Senior Notes have been converted into 53,295,128 shares of
Common Stock; and that all of the accrued and unpaid dividends on the Preferred
Stock as of June 30, 2003 have been converted, into 591,311 shares of Common
Stock. Therefore, for purposes of computing the percentages under this table,
there are 338,187,182 shares of Common Stock issued and outstanding.
(3) Includes 500,000 shares issuable upon conversion of Senior Notes, 311,000
shares of Common Stock beneficially owned by his spouse, 75,000 shares issuable
upon the exercise of warrants beneficially owned by his son and 80,000 and
50,000 shares issuable upon conversion of Senior Notes beneficially owned by his
son and spouse, respectively. Does not include the right granted to Mr. Jensen
under his Employment Agreement to receive Common Stock upon the occurrence of a
USA Transaction (as defined therein). See "Executive Employment Agreements".
(4) Includes 250,000 shares issuable to Mr. Herbert upon the conversion of
Senior Notes, 1,000 shares of Common Stock beneficially owned by his child,
100,000 shares of Common Stock beneficially owned by his spouse and 250,000
shares issuable upon the conversion of Senior Notes beneficially owned by his
spouse.
(5) Includes 22,500 shares of Common Stock issuable to Mr. Kolls upon the
exercise of warrants, 12,000 shares of Common Stock owned by his spouse, 24,000
shares issuable to his spouse upon conversion of her Senior Note and 3,600
shares issuable upon the exercise of warrants beneficially owned by his spouse.
(6) Includes 80,000 shares of Common Stock beneficially owned by Mr. Lawlor's
spouse.
(7) Includes 375,549 shares of Common Stock owned by her spouse, 5,150 shares
underlying Series A Preferred Stock held by her and her spouse, 1,109,420 shares
issuable upon the conversion of her Senior Notes, 72,895 shares issuable to her
spouse upon the conversion of his Senior Notes, 300,000 shares issuable upon the
exercise of her warrants, 77,000 shares issuable upon the exercise of options
held by her and 5,000 shares issuable upon the exercise of options held by her
spouse.
(8) Includes 225,000 shares issuable upon conversion of Senior Notes.
(9) Includes 17,846 shares of Common Stock owned by the Sellers Pension Plan of
which Mr. Sellers is a trustee, 4,952 shares of Common Stock owned by Sellers
Process Equipment Company of which he is a Director, and 10,423 shares of Common
Stock owned by Mr. Seller's wife. Includes 408,334 shares issuable upon
conversion of his Senior Notes.
(10) Includes 116,670 shares of Common Stock issuable to Mr. Van Alen upon
conversion of his Senior Notes and 4,000 shares of Common Stock beneficially
owned by his spouse.
(11) Includes 2,270,683 shares of Common Stock owned by La Jolla and 26,465,376
shares of Common Stock issuable to upon the exercise of Purchase Warrants. In
October 2003, warrants exercisable for 9,000,000 of these shares were cancelled.
(12) Includes 3,571,429 shares of Common Stock owned by Kazi and 19,285,716
shares of Common Stock issuable upon the exercise of Purchase Warrants.
(13) Includes all shares of Common Stock described in footnotes (3) through (10)
above.
Preferred Stock
The following table sets forth, as of June 30, 2003 the beneficial ownership of
the Preferred Stock by the Company's directors and executive officers, the other
employee named in the Summary Compensation Table set forth above, as well as by
the Company's directors and executive officers as a group. Except as set forth
below, the Company is not aware of any beneficial owner of more than five
percent of the Preferred Stock. Except as otherwise indicated, the Company
believes that the beneficial owners of the Preferred Stock listed below, based
on information furnished by such owners, have sole investment and voting power
with respect to such shares, subject to community property laws where
applicable.
Number of Shares
Name and Address of of Preferred Stock Percent
Beneficial Owner Beneficially Owned of Class(l)
------------------- ------------------ --------
Adele H. Hepburn
208 St. Georges Road
Ardmore, Pennsylvania 19003 5,150 shares (2) *
All Directors and
Executive Officers
As a Group (9 persons) 0 *
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(1) There were 524,492 shares of Preferred Stock issued and outstanding as of
June 30, 2003.
(2) Ms. Hepburn is an employee of the Company.
ITEM 1
ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
The shareholders are being asked to elect six directors, who will
comprise the entire Board of Directors of the Company, to serve until the next
annual meeting of shareholders or until their successors are duly elected and
qualified. All of the nominees are current members of the Board of Directors.
Although the Board of Directors has no reason to believe any of the
nominees will be unable to accept such nomination, if such should occur, proxies
will be voted (unless marked to the contrary) for such substitute person or
persons, if any, as shall be recommended by the Board of Directors. However,
proxies will not be voted for more than eight Directors. Shareholders who do not
wish their shares to be voted for a particular nominee may so direct in the
space provided in the proxy card.
The Board of Directors has nominated, and recommends the election of,
the six persons listed below to serve as Directors of the Company. The following
information is furnished with respect to each nominee for election as a
Director:
Name Age Position(s) with the Company
George R. Jensen, Jr. 55 Chief Executive Officer,
Chairman of the Board of Directors
Stephen P. Herbert 41 President, Chief Operating Officer, Director
William W. Sellers 81 Director
William L. Van Alen, Jr. 69 Director
Steven Katz 54 Director
Douglas M. Lurio 47 Director
George R. Jensen, Jr., has been the Chairman of the Board, Chief
Executive Officer, and Director of the Company since January 1992. Mr. Jensen is
the founder, and was Chairman, Director, and Chief Executive Officer of American
Film Technologies, Inc. ("AFT") from 1985 until 1992. AFT was in the business of
creating color imaged versions of black-and-white films. From 1979 to 1985, Mr.
Jensen was Chief Executive Officer and President of International Film
Productions, Inc. Mr. Jensen was the Executive Producer of the twelve hour
mini-series, "A.D.", a $33 million dollar production filmed in Tunisia. Proctor
and Gamble, Inc., the primary source of funds, co-produced and sponsored the
epic, which aired in March 1985 for five consecutive nights on the NBC network.
Mr. Jensen was also the Executive Producer for the 1983 special for public
television, "A Tribute to Princess Grace". From 1971 to 1978, Mr. Jensen was a
securities broker, primarily for the firm of Smith Barney, Harris AFAM. Mr.
Jensen was chosen 1989 Entrepreneur of the Year in the high technology category
for the Philadelphia, Pennsylvania area by Ernst & Young LLP and Inc. -----
Magazine. Mr. Jensen received his Bachelor of Science degree from the University
of Tennessee and is a graduate of the Advanced -------- Management Program at
the Wharton School of the University of Pennsylvania. Since 1996, Mr. Jensen has
been a Director of The Noah Fund, a publicly traded mutual fund.
Stephen P. Herbert was elected a Director of the Company in April 1996,
and joined the Company on a full-time basis in May 1996. Mr. Herbert became
President and Chief Operating Officer of the Company in June 1999. Prior to
joining the Company and since 1986, Mr. Herbert had been employed by Pepsi-Cola,
the beverage division of PepsiCo, Inc. From 1994 to April 1996, Mr. Herbert was
a Manager of Market Strategy. In such position he was responsible for directing
development of market strategy for the vending channel and subsequently the
supermarket channel for Pepsi-Cola in North America. Prior thereto, Mr. Herbert
held various sales and management positions with Pepsi-Cola. Mr. Herbert
graduated with a Bachelor of Science degree from Louisiana State University.
William W. Sellers joined the Board of Directors of the Company in May
1993. Mr. Sellers founded The Sellers Company in 1949 which has been nationally
recognized as the leader in the design and manufacture of state-of-the-art
equipment for the paving industry. Mr. Sellers has been awarded five United
States patents and several Canadian patents pertaining to this equipment. The
Sellers Company was sold to Mechtron International in 1985. Mr. Sellers is
Chairman of the Board of the Sellers Process Equipment Company which sells
products and systems to the food and other industries. Mr. Sellers is actively
involved in his community. Mr. Sellers received his undergraduate degree from
the University of Pennsylvania.
William L. Van Alen, Jr., joined the Board of Directors of the Company
in May 1993. Mr. Van Alen is President of Cornerstone Entertainment, Inc., an
organization engaged in the production of feature films of which he was a
founder in 1985. Since 1996, Mr. Van Alen has been President and a Director of
The Noah Fund, a publicly traded mutual fund. Prior to 1985, Mr. Van Alen
practiced law in Pennsylvania for twenty-two years. Mr. Van Alen received his
undergraduate degree in Economics from the University of Pennsylvania and his
law degree from Villanova Law School.
Steven Katz joined the Board of Directors in May 1999. He is President
of Steven Katz & Associates, Inc., a management consulting firm specializing in
strategic planning and corporate development for technology and service-based
companies in the health care, environmental, telecommunications and Internet
markets. Mr. Katz's prior experience includes five years with Price Waterhouse &
Co. in audit, tax and management advisory services; two years of corporate
planning with Revlon, Inc.; five years with National Patent Development
Corporation ("NPDC") in strategic planning, merger and acquisition, technology
in-licensing and out-licensing, and corporate turnaround experience as President
of three NPDC subsidiaries; and two years as a Vice President and General
Manager of a non-banking division of Citicorp, N.A.
Douglas M. Lurio joined the Board of Directors of the Company in June
1999. Mr. Lurio is President of Lurio & Associates, P.C., attorneys-at-law,
which he founded in 1991. He specializes in the practice of corporate and
securities law. Prior thereto, he was a partner with Dilworth, Paxson LLP. Mr.
Lurio received a Bachelor of Arts degree in Government from Franklin & Marshall
College, a Juris Doctor degree from Villanova Law School, and a Masters in Law
(Taxation) from Temple Law School.
Cumulative voting rights do not exist with respect to the election of
Directors. Pursuant to the Articles of Incorporation and Pennsylvania law, the
Directors of the Company are to be elected by the holders of the Common Stock
and Series A Preferred Stock voting together, with each share of Common Stock
and Series A Preferred Stock entitled to one vote.
The Board of Directors unanimously recommends that you vote "FOR" the
election of all nominees.
Meetings of the Board of Directors and Committees
The Board of Directors of the Company held a total of eleven meetings
during the fiscal year ended June 30, 2003 (not including actions adopted by
unanimous consent). Each member of the Board of Directors attended at least 75%
of the aggregate of the number of meetings of the Board and Board Committees of
which he was a member during the 2003 fiscal year.
The Board of Directors has an Audit Committee and a Compensation
Committee.
The Audit Committee of the Board of Directors presently consists of Mr.
Van Alen (Chairman), Mr. Sellers and Mr. Lurio. It held four meetings during the
2003 fiscal year. The Audit Committee recommends the engagement of the Company's
independent accountants and is primarily responsible for approving the services
performed by the Company's independent accountants, for reviewing and evaluating
the Company's accounting principles, reviewing the independence of independent
auditors, and reviewing the adequacy and effectiveness of the Company's internal
controls. See "Report of the Audit Committee."
The Compensation Committee of the Board of Directors presently consists
of Mr. Sellers (Chairman), Mr. Katz and Mr. Van Alen. The Committee reviews and
recommends compensation and compensation changes for executives of the Company
and the Board of Directors and administers the Company's stock option and stock
grant plans. The Compensation Committee met two times during the 2003 fiscal
year.
Compensation of Directors
Members of the Board of Directors receive cash and equity compensation
for serving on the Board of Directors.
In April 2002, the Company granted to each of the then outside
Directors (Messrs. Sellers, Van Alen, Katz, Lurio, and Edwin P. Boynton, a
former Director) options to purchase up to 100,000 shares of Common Stock at
$.40 per share as compensation for serving the one-year term which commenced
March 21, 2002. The options were fully vested and were exercisable at any time
prior to April 12, 2005. Commencing on July 1, 2002 and at any and all times
through June 30, 2003, each Director had been granted the right, without the
payment of the per share exercise price of such options, to receive up to 50,000
shares represented by those options. In September 2002, Edwin P. Boynton elected
to receive 50,000 shares in lieu of the above options.
In February 2001, the Company granted a total of 300,000 options to
purchase Common Stock at $1.00 per share to each of the then outside members of
the Board (Messrs. Sellers, Van Alen, Smith, Katz, Lurio, and Boynton). Of
these, 120,000 options vested immediately; 90,000 options vested on June 30,
2001; and 90,000 vested on June 30, 2002. The options were exercisable at any
time within five years following the vesting.
On December 31, 2002, each of Messrs. Sellers, Van Alen, Katz, Lurio,
and Boynton voluntarily canceled all of the outstanding options then held by
them.
During June 2003, we paid $50,000 to each of Messrs. Sellers, Van Alen,
and Katz for their services as Directors during the 2003 fiscal year. As a
condition of the cash payment, each of these Directors agreed to purchase from
the Company 500,000 shares of Common Stock at $0.10 per share.
ITEM 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(Item 2 on Proxy Card)
The firm of Ernst & Young LLP has served as the Company's independent
auditors for fiscal years since 1992 and has been selected by the Board of
Directors to serve in the same capacity for fiscal year 2004. The shareholders
will be asked to ratify this appointment at the Annual Meeting. A representative
of Ernst & Young LLP is expected to be present at the Annual Meeting and will
have the opportunity to make a statement if desired and is expected to be
available to respond to appropriate questions.
The following resolution concerning the appointment of the independent
auditors will be presented to the shareholders at the Annual Meeting:
RESOLVED, that the appointment by the Board of Directors of
the Company of Ernst & Young LLP, independent auditors, to
examine the books, accounts and records of the Company for the
fiscal year ending June 30, 2004 is hereby ratified and
approved.
The affirmative vote of a majority of the votes cast by all holders of
the outstanding shares of Common Stock and Series A Preferred Stock voting
together (with each share of Common Stock and Series A Preferred Stock entitled
to one vote) is required for ratification of this proposal.
The Board of Directors unanimously recommends that you vote "FOR" the
ratification of the proposal set forth above.
ITEM 3
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION INCREASING
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
(Item 3 on Proxy Card)
The Company's Articles of Incorporation presently authorizes the
issuance of up to 400,000,000 shares of Common Stock. The Board of Directors has
approved a resolution which if approved by the shareholders would increase the
number of authorized shares of Common Stock to 475,000,000.
As of November 24, 2003, the number of issued and outstanding shares of
Common Stock on a fully converted basis is 389,708,631 which is slightly less
than the number of shares of Common Stock which are currently authorized
(400,000,000) by the Articles of Incorporation. These shares consist of the
following:
* 285,341,570 shares of Common Stock actually issued and outstanding;
* 528,287 shares issuable upon conversion of the currently issued and
outstanding Series A Preferred Stock;
* 593,737 shares issuable upon conversion of the accrued and unpaid
dividends on the Series A Preferred Stock;
* 2,646,485 shares issuable upon exercise of outstanding options;
* 47,076,532 shares issuable upon exercise of outstanding warrants; and
* 53,522,020 shares reserved for issuance upon the conversion of the
outstanding 12% Convertible Senior Notes (includes shares reserved for issuance
upon extension of maturity dates of existing notes due 2003 and 2004).
Based upon the foregoing outstanding and reserved shares, the Company
currently has 10,291,369 shares of Common Stock remaining available for other
purposes. The purpose of the proposed amendment is to authorize a sufficient
number of additional shares of Common Stock to provide the Company with the
flexibility to issue Common Stock for a variety of corporate purposes, such as
to make acquisitions through the use of shares, to raise equity capital, to
issue additional warrants or options, or to issue shares in lieu of quarterly
cash interest payments due on the Convertible Senior Notes. As of November 24,
2003, and assuming approval of this proposal, there would be 85,291,369 shares
of Common Stock eligible for future issuance. The Board of Directors will have
the authority to issue these authorized shares of Common Stock from time to time
for proper corporate purposes without further shareholder approval unless
required by applicable law. Shareholders do not have preemptive rights with
respect to the Common Stock. The issuance of Common Stock or securities
convertible into Common Stock, on other than a pro-rata basis, would result in
the dilution of a present shareholder's interest in the Company.
The resolution to be considered by the shareholders at the Annual
Meeting reads as follows:
RESOLVED, that Paragraph (A) Classes of Stock of Article 4 of
the Articles of Incorporation of the Company shall be amended
and restated to read in full as follows:
(A) Classes of Stock. The aggregate number of shares
which the corporation shall have authority to issue
is 476,800,000 shares, consisting of 475,000,000
shares of Common Stock, without par value, and
1,800,000 shares of Series Preferred Stock, without
par value.
Shareholder approval of this proposal is required under Pennsylvania
law and the Articles of Incorporation. Approval of the amendment to the
Company's Articles of Incorporation increasing the number of authorized shares
of Common Stock requires the affirmative vote of a majority of all votes cast by
the holders of outstanding shares of Common Stock and Series A Preferred Stock
voting together (with each share of Common Stock and Series A Preferred Stock
entitled to one vote). If this proposal is adopted, it will become effective
upon filing of Articles of Amendment with the Department of State of the
Commonwealth of Pennsylvania which the Company anticipates filing immediately
following the Annual Meeting.
The Board of Directors unanimously recommends that you vote "FOR" this
amendment to the Company's Articles of Incorporation to increase the authorized
number of shares of Common Stock.
EXECUTIVE OFFICERS OF THE COMPANY
Our executive officers are as follows:
Name Age Position(s) Held
---- --- ----------------
George R. Jensen, Jr. 55 Chief Executive Officer,
Chairman of the Board of
Directors
Stephen P. Herbert 41 President, Chief Operating Officer, Director
Haven Brock Kolls, Jr. 38 Vice President - Research and
Development
David M. DeMedio 32 Chief Financial Officer
Certain information concerning the foregoing executive officers who are
also directors of the Company is set forth elsewhere in this Proxy Statement.
See "Item 1- Election of Directors." The following description contains certain
information concerning the foregoing executive officers who are not also
directors of the Company.
Haven Brock Kolls, Jr., joined USA Technologies on a full-time basis in
May 1994 and was elected an executive officer in August 1994. From January 1992
to April 1994, Mr. Kolls was Director of Engineering for International Trade
Agency, Inc., an engineering firm specializing in the development of control
systems and management software packages for use in the vending machine
industry. Mr. Kolls was an electrical engineer for Plateau Inc. from 1988 to
December 1992. His responsibilities included mechanical and electrical
computer-aided engineering, digital electronic hardware design, circuit board
design and layout, fabrication of system prototypes and software development.
Mr. Kolls is a graduate of the University of Tennessee with a Bachelor of
Science Degree in Engineering.
David M. DeMedio joined USA Technologies on a full-time basis in March
1999 as Controller and became Chief Financial Officer effective July 1, 2003. In
the summer of 2001, Mr. DeMedio was promoted to Director of Financial Services
where he was responsible for the sales and financial data reporting to
customers, the companies turnkey banking services and maintaining and developing
relationships with credit card processors and card associations. From 1996 to
March 1999, prior to joining the company, Mr. DeMedio had been employed by Elko,
Fischer, Cunnane and Associates, LLC as a supervisor in its accounting and
auditing and consulting practice. Prior thereto, Mr. DeMedio held various
accounting positions with Intelligent Electronics, Inc., a multi-billion
reseller of computer hardware and configuration services. Mr. DeMedio graduated
with a Bachelor of Science in Business Administration from Shippensburg
University and is a Certified Public Accountant.
EXECUTIVE COMPENSATION
Compensation Tables
The following table sets forth certain information with respect to compensation
paid or accrued by the Company during the fiscal years ended June 30, 2001, June
30, 2002 and June 30, 2003 to each of the executive officers and employee of the
Company named below.
Summary Compensation Table
Fiscal
Name and Principal Position Year Annual Compensation Long Term Compensation
------------------------------ ------ ---------------------------------------- ---------------------------
Salary Bonus Other Restricted Securities
(1) Annual Stock Underlying
Compensation Awards Options (3)
-------------------------------------------------------------------------------------------------------------------
George R. Jensen, Jr., 2003 $189,038 $250,000 $223,211(2) -- --
Chief Executive Officer, 2002 $135,000 $288,000 $ 80,000(2) -- 320,000
2001 $135,000 $140,000 -- -- 300,000
Stephen P. Herbert, 2003 $183,854 $225,000 $185,317(2) -- --
President 2002 $125,000 $270,000 $ 80,000(2) -- 300,000
2001 $125,000 $134,400 -- -- 80,000
Leland P. Maxwell, Chief 2003 $120,000 $ 85,845 $ 89,190(2) -- --
Financial Officer(4) 2002 $110,308 $151,200 -- -- 130,000
2001 $108,000 $ 44,240 -- -- 50,000
H. Brock Kolls, Senior Vice 2003 $150,000 $ 25,000 $ 64,493(2) -- --
President, Research & 2002 $125,769 $180,000 $ 50,000(2) -- 250,000
Development 2001 $120,000 $ 97,440 -- -- 80,000
Michael K. Lawlor, Senior 2003 $120,000 $103,252 $ 89,190(2) -- --
Vice President, Sales and 2002 $103,846 $151,200 -- -- 130,000
Marketing(4) 2001 $100,000 $ 38,640 -- -- 50,000
Adele H. Hepburn 2003 $ 91,000 $282,382 -- -- --
Director of Investor 2002 $ 91,000 $472,609 -- -- 500,000
Relations 2001 $ 91,000 $171,700 -- -- --
(1) For fiscal year 2001, represents shares of Common Stock issued to the
executive officers during the fiscal year valued at $1.12 per share, the closing
bid price on the date of issuance. For Mr. Lawlor, the bonus also includes
$1,265 sales commission. For fiscal year 2002, represents shares of Common Stock
issued to the executive officers valued at $0.45 per share, which was the market
value on the date of grant (Mr. Jensen-640,000 shares; Mr. Herbert-600,000
shares; Mr. Kolls-400,000 shares; Mr. Maxwell-260,000 shares; and Mr.
Lawlor-260,000 shares). For Mr. Maxwell and Mr. Lawlor in 2002, the bonus also
includes 90,000 shares of Common Stock valued at $0.38, which was the market
price on the day of grant. This stock was awarded to reimburse them for tax
payments incurred as a result of the award of a previous bonus. For Adele
Hepburn in fiscal 2002, the bonus includes $408,267 of non cash compensation, as
follows: 435,334 shares of Common Stock at $0.60; 384,334 shares at $0.10; and a
$108,834 2001 - D 12% Senior Notes due December 31, 2003. For fiscal year 2003,
includes a $100,000 Senior Note due 2005, including 200,000 shares valued at
$.20, and $150,000 cash bonus for Mr. Jensen and $100,000 Senior Note due 2005,
including 200,000 shares valued at $0.20 and $125,000 cash bonus for Mr. Herbert
and a $25,000 cash bonus for Mr. Kolls; and a $100,000 Senior Note due 2005,
including 200,000 shares valued at $.20 per share, a $41,095 Senior Note due
2004, and $100,000 cash bonus for Ms. Hepburn.
(2) Represents cash payments authorized to reimburse certain executive officers
for tax payments incurred from the award of a previous bonus as well as car
allowance payments.
(3) In July 1999, the Company extended the expiration dates until June 30, 2001
of the options to acquire Common Stock held by the following directors,
officers, and employee: Adele Hepburn - 77,000 options; H. Brock Kolls - 20,000
options; William Sellers - 15,500 options; and William Van Alen - 12,500
options. All of the foregoing options would have expired in the first two
calendar quarters of the year 2000 or the first calendar quarter of year 2001.
In February 2001, all these options were further extended until June 30, 2003,
and in addition the expiration dates of the following additional options were
also extended to June 30, 2003: H. Brock Kolls - 20,000 options; Stephen Herbert
- 40,000 options; Michael Lawlor - 3,750 options; George Jensen - 200,000
options. In October 2000, the Company issued to George R. Jensen, Jr., fully
vested options to acquire up to 200,000 shares of Common Stock at $1.50 per
share. The options were exercisable at any time within two years following
issuance. In February 2001, the Company extended the expiration date of these
options until June 30, 2003. Effective December 31, 2002, all of the outstanding
options (whether vested or unvested) then held by each of Messrs. Jensen,
Herbert, Kolls, Maxwell, Sellers, Van Alen, Katz, Lurio and Boynton were
voluntarily canceled by each of the foregoing individuals.
(4) Employed by the Company through June 30, 2003.
During the fiscal year ended June 30, 2003, there were no grants of stock
options to the executive officers or the employee named above.
TOTAL OPTIONS EXERCISED IN FISCAL YEAR ENDED JUNE 30, 2003 AND YEAR END VALUES
The following table gives information for options exercised by an employee in
fiscal year 2003, and the number of options held by the employee at fiscal year
end.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the -Money
Options at Options at
FY-End (#) FY-End($)
Shares Acquired Exercisable/ Exercisable/
Name On Exercise (#) Value Realized ($) Unexersisabble Unexercisable
--------------------------------------------------------------------------------------------------------
Adele H. Hepburn 0 0 77,000/0 0
--------------------------------------------------------------------------------------------------------
During the fiscal year ended June 30, 2003, there were no options
exercised by the executive officers and there were no options held by executive
officers at fiscal year end.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Mr. Jensen which
expires June 30, 2005, and is automatically renewed from year to year thereafter
unless canceled by Mr. Jensen or the Company. The agreement provides for an
annual base salary of $180,000. Mr. Jensen is entitled to receive such bonus or
bonuses as may be awarded to him by the Board of Directors. In determining
whether to pay such a bonus, the Board would use its subjective discretion. The
Agreement requires Mr. Jensen to devote his full time and attention to the
business and affairs of the Company, and obligates him not to engage in any
investments or activities which would compete with the Company during the term
of the Agreement and for a period of one year thereafter.
The agreement also grants to Mr. Jensen in the event a "USA Transaction" (as
defined below) occurs after the date thereof an aggregate of 14,000,000 shares
of Common Stock subject to adjustment for stock splits or combinations("Jensen
Shares"). Mr. Jensen is not required to pay any additional consideration for the
Jensen Shares. At the time of any USA Transaction, all of the Jensen Shares are
automatically deemed to be issued and outstanding immediately prior to any USA
Transaction, and are entitled to be treated as any other issued and outstanding
shares of Common Stock in connection with such USA Transaction.
The term USA Transaction is defined as (i) the acquisition of fifty-one percent
or more of the then outstanding voting securities entitled to vote generally in
the election of Directors of the Company by any person, entity or group, or (ii)
the approval by the shareholders of the Company of a reorganization, merger,
consolidation, liquidation, or dissolution of the Company, or the sale,
transfer, lease or other disposition of all or substantially all of the assets
of the Company. The Jensen Shares are irrevocable and fully vested, have no
expiration date, and will not be affected by the termination of Mr. Jensen`s
employment with the Company for any reason whatsoever. If a USA Transaction
shall occur at a time when there are not a sufficient number of authorized but
unissued shares of Common Stock, then the Company shall as a condition of such
USA Transaction promptly take any and all appropriate action to make available a
sufficient number of shares of Common Stock. In the alternative, the Company may
structure the USA Transaction so that Mr. Jensen would receive the same amount
and type of consideration in connection with the USA Transaction as any other
holder of Common Stock.
The Company has entered into an employment agreement with Mr. Herbert, which
expires on June 30, 2005, and is automatically renewed from year to year
thereafter unless canceled by Mr. Herbert or the Company. The Agreement provides
for an annual base salary of $165,000 per year. Mr. Herbert is entitled to
receive such bonus or bonuses as the Board of Directors may award to him. The
Agreement requires Mr. Herbert to devote his full time and attention to the
business and affairs of the Company and obligates him not to engage in any
investments or activities which would compete with the Company during the term
of the agreement and for a period of one year thereafter. In the event that a
USA Transaction (as defined in Mr. Jensen's employment agreement) shall occur,
then Mr. Herbert has the right to terminate his agreement upon 30 days notice to
USA.
Mr. Kolls has entered into an employment agreement with the Company, which
expires on June 30, 2004, and is automatically renewed from year to year
thereafter unless canceled by Mr. Kolls or the Company. The agreement provides
for an annual base salary of $150,000 per year. Mr. Kolls is also entitled to
receive such bonus or bonuses as may be awarded to him by the Board of
Directors. The Agreement requires Mr. Kolls to devote his full time and
attention to the business and affairs of the Company, and obligates him not to
engage in any investments or activities which would compete with the Company
during the term of his agreement and for a period of one year thereafter.
Ms. Hepburn has entered into an employment agreement with the Company, which
expires on June 30, 2005, and is automatically renewed from year to year
thereafter unless canceled by Ms. Hepburn or the Company. The agreement provides
for an annual base salary of $91,000 per year. Ms. Hepburn is also entitled to
receive such bonus or bonuses as the Board of Directors may award to her. The
Agreement requires Ms. Hepburn to devote her full time and attention to the
business and affairs of the Company, and obligates her not to engage in any
investments or activities which would compete with the Company during the term
of the agreement and for a period of one year thereafter.
The employment agreements of Messrs. Maxwell and Lawlor expired on June 30,
2003.
REPORT OF THE AUDIT COMMITTEE
Membership And Role Of The Audit Committee
The Audit Committee of the Company's Board of Directors (the "Audit
Committee") consists of three outside directors, currently Messrs. Sellers, Van
Alen, and Lurio, appointed by the Board of Directors. Each member of the Audit
Committee other than Mr. Lurio is independent as defined under the National
Association of Securities Dealers' listing standards. The Audit Committee is
governed by a written charter adopted and approved by the Board of Directors.
Review of The Company's Audited Financial Statements For The Fiscal Year Ended
June 30, 2003
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended June 30, 2003 with the
Company's management. The Audit Committee also discussed with Ernst & Young LLP,
the Company's independent auditors, the matters required to be discussed by
Statement on Auditing Standards No. 61 `Communication with Audit Committees'.
The Audit Committee has also received the written disclosures from
Ernst & Young LLP relating to their independence as required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees)
and the Audit Committee has discussed with Ernst & Young LLP the independence of
that firm. The Audit Committee has also considered whether the provision of
non-audit services by Ernst & Young LLP is compatible with maintaining Ernst &
Young LLP's independence.
Based on the Audit Committee's reviews and discussions noted above, the
Audit Committee recommended to the Board of Directors that the Company's
consolidated audited financial statements be included in the Company's Annual
Report on Form 10-KSB for the fiscal year ended June 30, 2003, for filing with
the Securities and Exchange Commission.
Audit Committee
----------------
Mr. William L. Van Alen (Chairman)
Mr. William W. Sellers
Mr. Douglas M. Lurio
Audit And Related Fees
Fees to Accountants for Services Rendered During Fiscal Year 2003
Audit Fees
The aggregate fees billed to the Company by Ernst & Young LLP for
professional services rendered for the audit of the Company's annual financial
statements for the fiscal year ended June 30, 2003 and the reviews of the
financial statements included in the Company's quarterly reports on Form 10-QSB
for that fiscal year totaled $265,750.
Financial Information Systems Design and Implementation Fees
The Company did not engage Ernst & Young LLP to provide, during the
fiscal year ended June 30, 2003, any services for the Company regarding the
design or implementation of the Company's financial information systems, within
the meaning of Rule 2-01(c)(4)(ii) of Regulation S-X.
All Other Fees
Fees billed to the Company by Ernst & Young LLP during the Company's
2003 fiscal year for services rendered other than for services covered by the
preceding two paragraphs, including tax related services, totaled $228,047.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of Common Stock, to file with the SEC initial reports of ownership and
reports of changes in ownership of Common Stock. Executive officers, directors
and ten percent stockholders are required by SEC regulations to furnish the
Company with a copy of all Section 16(a) forms ("Forms 3, 4, and 5") that they
file. To the Company's knowledge, based solely on a review of copies of the
Forms 3, 4 and 5 furnished to the Company, except as set forth below, all
applicable Section 16(a) filing requirements were complied with.
Mr. Kolls failed to file a Form 3 reporting his beneficial ownership of
securities which was required to be filed on October 28, 2002. The appropriate
Form was filed by Mr. Kolls on January 3, 2003.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 31, 2000, Stitch Networks Corporation ("Stitch") executed a
Vending Placement, Supply and Distribution Agreement with Eastman Kodak Company,
Maytag Corporation and Dixie Narco, Inc., which formed a strategic alliance to
market and execute a national vending program for the sale of one-time use
camera and film products. The Agreement provides for an initial term of three
years ending December 31, 2003, with additional provisions for early termination
and extensions as defined. Furthermore, the Agreement also provides for
exclusivity among the parties for the term of the Agreement relating to the sale
of camera and film products from vending machines within the Continental United
States. Pursuant to this agreement, Stitch, the Company`s subsidiary, purchases
vending machines from Dixie-Narco, Inc. ("Dixie"). Dixie is owned by Maytag
Corporation which is the owner of the Company`s shareholder, Maytag Holdings,
Inc. Mr. Boyle, a former Director of the Company, is a Vice President of Maytag
Corporation. There were purchases from Dixie of $201,000 and $8,000 for the
fiscal year ended June 30, 2003 and for the period May 14, 2002 through June 30,
2002, respectively. Amounts payable to Dixie of approximately $130,000 and
$124,000 are included in accounts payable in the June 30, 2003 and 2002
consolidated balance sheets of the Company.
During the fiscal years ended June 30, 2003 and June 30, 2002, the
Company incurred charges to Lurio & Associates, P.C., of which Mr. Lurio is
President and a shareholder, for professional fees of approximately $305,000 and
$213,000 respectively, for legal services rendered to the Company by such law
firm.
During the years ended June 30, 2003 and 2002, the Company accrued
approximately $22,000 and $30,000, respectively, for these services. Mr. Lurio
is a Director of the Company.
In October 2002, the Company approved the issuance to each of George R.
Jensen, Jr., our Chief Executive Officer, and Stephen P. Herbert, our President
and Chief Operating Officer, of $100,000 of the Senior Note offering. Pursuant
thereto, each of them received a $100,000 12% Senior Note due December 31, 2005,
and the related 200,000 shares of Common Stock. Both Mr. Jensen and Mr. Herbert
earned the Note and related shares in fiscal 2003 for services rendered. In
October 2002, the Company approved the issuance of $100,000 of the Senior Note
offering and 200,000 related shares of Common Stock to Adele Hepburn for
services rendered during the 2002 calendar year. Ms. Hepburn earned the Note and
related shares in fiscal 2003 for services rendered.
In April and May 2003, the Company authorized the payment of $420,000
over the following six months to its five executive officers. The payments are
to assist in the 2002 tax liability incurred by the executives due to common
stock bonuses received by them during calendar year 2002.
During June 2003, the Company approved the following cash payments as a
bonus for services rendered to the Company by the named executive during the
2003 fiscal year: Mr. Jensen-$150,000; Mr. Herbert-$125,000; Ms.
Hepburn-$100,000; and Mr. Kolls- $25,000. The payment of the bonus was
conditioned upon the executive investing the entire cash bonus in common stock
of the Company at $.10 per share.
On July 10, 2003, USA and George R. Jensen, Jr., Chief Executive
Officer and Chairman of USA, agreed upon an amendment to Mr. Jensen's employment
agreement. Prior to the amendment, Mr. Jensen's agreement had provided that upon
the occurrence of a USA Transaction (as defined therein) Mr. Jensen would
receive that number of shares equal to seven percent of the then issued and
outstanding Common Stock (on a fully converted basis). Pursuant to the
amendment, the number of shares of Common Stock of USA issuable to Mr. Jensen by
USA upon the occurrence of a USA Transaction was fixed at 14,000,000 shares
(subject to dilution) rather than seven percent of the then issued and
outstanding shares as previously provided (which was not subject to dilution).
USA also issued to Mr. Jensen an aggregate of 10,500,000 shares of restricted
Common Stock, 2,500,000 shares of which were issued as compensation to Mr.
Jensen for future services, and 8,000,000 shares of which were issued to Mr.
Jensen in connection with the employment agreement amendment. Mr. Jensen has
entered into a lock up agreement pursuant to which he shall not sell 2,500,000
of the shares for a one-year period and 8,000,000 of the shares for a two-year
period.
The Company does not have any policy with respect to entering into
future related party transactions.
SHAREHOLDER PROPOSALS FOR THE 2005 ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals submitted pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") for inclusion
in the Company's proxy materials for its 2005 Annual Meeting of Shareholders
must be received by the Secretary of the Company at the principal offices of the
Company no later than August __, 2004.
Written notice of proposals of shareholders submitted outside the
processes of Rule 14a-8 under the Exchange Act for consideration at the 2004
Annual Meeting must have been received by the Company on or before October __,
2004 in order to be considered timely for purposes of Rule 14a-4 under the
Exchange Act. The persons designated in the Company's proxy card will be granted
discretionary authority with respect to any shareholder proposal with respect to
which the Company does not receive timely notice.
GENERAL INFORMATION
The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the Notice of Annual Meeting,
but if any matters are properly presented, it is the intention of the persons
named in the enclosed form of proxy to vote on such matters in accordance with
their best judgment to the same extent as the person signing the proxy would be
entitled to vote.
Shareholders who desire to have their shares voted at the Annual
Meeting are requested to mark, sign, and date the enclosed proxy and return it
promptly in the enclosed postage-paid envelope. Shareholders may revoke their
proxies at any time prior to the Annual Meeting and shareholders who are present
at the Annual Meeting may revoke their proxies and vote, if they so desire, in
person.
A copy of the Company's Annual Report on Form 10-KSB, as filed with the
Securities and Exchange Commission, for the fiscal year ended June 30, 2003 may
be obtained, free of charge, by any shareholder by writing or calling Investor
Relations Department, USA Technologies, Inc., 100 Deerfield Lane, Suite 140,
Malvern, Pennsylvania 19355, telephone (610) 989-0340.
By Order of the Board of Directors,
/s/ George R. Jensen, Jr.
December __, 2003 GEORGE R. JENSEN, JR.
Chairman and Chief Executive Officer
USA TECHNOLOGIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS -
ANNUAL MEETING OF SHAREHOLDERS - JANUARY 16, 2004
The undersigned, revoking all prior proxies, hereby appoint(s) George
R. Jensen, Jr., and David M. DeMedio, or either of them, with full power of
substitution, as proxies to represent and vote, as designated below, all share
of Common Stock and Series A Preferred Stock of USA Technologies, Inc., held of
record by the undersigned at the close of business on December 12, 2003, at the
Annual Meeting of Shareholders to be held on January 16, 2004, and at any
adjournment thereof.
This proxy when properly executed will be voted in the manner directed
on the reverse side hereof by the undersigned. If no contrary direction is made,
this proxy will be voted "FOR" all of the proposals set forth on the reverse
side hereof, including all the nominees listed in Item 1 (or, if any such
nominees should be unable to accept such nomination, for such other substitute
person or persons as may be recommended by the Board of Directors), and in
accordance with the proxies' best judgment upon other matters properly coming
before the Annual Meeting and any adjournments thereof.
Please date and sign exactly as your name appears below. In the case of
joint holders, each should sign. If the signor is a corporation or partnership,
sign in full the corporate or partnership name by an authorized officer or
partner. When signing as attorney, executor, trustee, officer, partner, etc.,
give full title.
Dated: _____________, 200_
Signature
Signature
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
IF YOU SIGN THIS PROXY WITHOUT OTHERWISE MARKING THE FORM, THIS PROXY WILL BE
VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS ON ALL MATTERS TO BE CONSIDERED
AT THE ANNUAL MEETING.
[SEE REVERSE SIDE]
1. The election of George R. Jensen, Jr., Stephen P. Herbert,
William W. Sellers, William L. Van Alen, Jr., Steven Katz and Douglas M. Lurio,
as Directors.
FOR ALL NOMINEES WITHHOLD AUTHORITY
--- ---
(If you wish to withhold authority to vote for one or more but less
than all of the nominees named above, so indicate on the line provided
below.)
---------------------------------------------------
2. Ratification of the appointment of Ernst & Young LLP as the
independent auditors of the Company for fiscal year ending June 30, 2004.
FOR AGAINST ABSTAIN
--- ---- ---
3. The proposal to increase the authorized shares of Common
Stock to 475,000,000.
___ FOR ____ AGAINST ___ ABSTAIN
4. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the Annual Meeting and any
adjournment thereof.