USA TECHNOLOGIES, INC.
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(Name of Registrant as Specified in Its Charter)
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S.A.V.E. PARTNERS IV, LLC
LOCKE PARTNERS I LLC
JOHN S. IOANNOU
AJOY H. KARNA
RODMAN K. REEF
ANDREW SALISBURY
CRAIG W. THOMAS
BRADLEY M. TIRPAK
GEORGE WALLNER
JAMES W. STUCKERT REVOCABLE TRUST U/A DTD 2/10/86 AMENDED & RESTATED 2/7/07
DIANE V. STUCKERT REVOCABLE TRUST U/A DTD 8/7/03
JAMES W. STUCKERT
DIANE V. STUCKERT
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(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
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(3)
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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):
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USAT’s stock price declined by more than 57% between May 31, 2011 and March 9, 2012, the last trading day before S.A.V.E. Partners IV, LLC commenced its recent purchases of USAT shares.1 In our view, any uptick in the stock price after that date is likely due to SAVE’s purchasing activity and the announcement that we nominated seven highly-qualified candidates for election to the USAT Board.
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USAT continues to burn through significant cash. In the first nine months of fiscal 2012, USAT has depleted the cash on its balance sheet by more than 50%.2 We are concerned that continued negative cash flows may lead to additional shares being issued, diluting current shareholders and contributing to further deterioration of the share price.
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We do not believe USAT’s JumpStart Program is supported by a sound business plan. In fiscal 2012 to date, the Company has reported that the number of devices connected3 to its network has gone from 119,000 on June 30, 2011 to approximately 155,000 currently.4 Yet the stock price has gone in reverse.5 The JumpStart Program, which provides hardware at no upfront cost but generally does not require customers to make a long-term commitment, is not translating into profits and, in our view, does not provide an adequate return on investment in its current form.
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We believe the Company’s technology must be significantly upgraded or its ability to remain competitive in the future will be seriously jeopardized.
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Develop New Hardware – Develop lower cost hardware and develop higher functioning terminals to enable the Company’s customers to take advantage of the rapidly changing mobile payments market and increase the return on investment for all stakeholders, including by accelerating the timetable for achieving adequate returns on the JumpStart Program;
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Increase Processing Profits – Reduce costs and increase profitability in the transaction processing segment;
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Launch Vending Route Management and Other Value-Added Services – Develop services to help customers use data to optimize their vending routes and increase their profitability;
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Expand Internationally – Distribute the Company’s products on a global scale. According to a report by Global Industry Analysts, Inc., the worldwide installed base of vending machines is expected to reach 35 million units by 2015;
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Cut Costs – Cut costs and reinvest savings into the business to pursue the above initiatives. SAVE has identified what it believes to be significant potential cost savings, including terminating the legal services of Douglas M. Lurio, who is also a Board member, consolidating office space and eliminating the automobile allowance for senior executives.
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George Wallner founded Hypercom Corporation, a global payment technology provider that offered high security end-to-end electronic payment products, software solutions and services. Under his leadership, Hypercom frequently launched new hardware products and services and grew to over $250 million in revenues, becoming one of the largest credit card terminal companies in the world. Mr. Wallner was also a strategic advisor to Roam Data, a provider of smart-phone based electronic payments technology and services.
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Rodman K. Reef was Chairman and Chief Executive Officer of Citishare Corporation, a subsidiary of Citigroup Inc. engaged in the retail electronic payments business. Mr. Reef has participated on the boards and advisory committees of NYCE, Visa, MasterCard’s and Europay’s Maestro, The Clearing House’s Payments Company and the Electronic Funds Transfer Association, a payments industry trade association. Mr. Reef has extensive experience in the payment industry, including high volume transaction processing, and regulatory affairs.
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John S. Ioannou is the former President of Next Generation Vending, LLC, a leader in vending services for the Northeast region with over 25,000 vending machines. Mr. Ioannou led the turnaround of Next Generation, a customer of USAT, and spearheaded its efforts to apply vending route management technology to increase route operation efficiency and reduce the number of out-of-stock machines. Mr. Ioannou has vast knowledge of the vending industry, experience building a growth company and an extensive technology background.
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Ajoy H. Karna served in various senior-level finance and strategic capacities at PepsiCo, Inc., including Senior Vice President, Finance of Frito Lay, Inc. and Senior Vice President, Mergers and Acquisitions at PepsiCo Corporate. Mr. Karna has broad strategic and operational experience in the food, beverage and vending industries and valuable capital markets and finance experience.
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Andrew Salisbury is the former Chief Executive Officer of Corsidian, which was one of the largest distributors of customer contact solutions in Latin America before it was sold to Aspect Software in July 2011. Mr. Salisbury is currently CEO of Videlica, a technology developer and distributor providing innovative solutions for customer contact and communication.
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Craig W. Thomas co-founded and is a managing member of Shareholder Advocates for Value Enhancement, and is a former portfolio manager at S.A.C. Capital Advisors and financial analyst at Rainwater Inc. Mr. Thomas serves on the board of directors of Direct Insite Corp. and previously served on the boards of Laureate Education, Inc. and WCI Communities, Inc. Mr. Thomas has extensive experience as an investor and as a director of public companies.
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Bradley M. Tirpak co-founded and is a managing member of Shareholder Advocates for Value Enhancement, and is a former portfolio manager at Sigma Capital Management and Caxton Associates and Vice President at Credit Suisse First Boston. Prior to working in the financial industry, Mr. Tirpak founded a profitable telecommunications company providing services in the U.S., Mexico and Latin America. He has extensive experience as an investor, is a former member of the Company’s Board, and has a comprehensive understanding of the Company’s business.
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