x
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF
1934
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Pennsylvania
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23-2679963
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(State
or other jurisdiction of incorporation)
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(I.R.S.
employer Identification No.)
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100
Deerfield Lane, Suite 140, Malvern, Pennsylvania
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19355
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(Address
of principal executive offices)
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(Zip
Code)
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Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer x
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PAGE NO.
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|||
Part
I - Financial Information
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|||
Item
1.
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Condensed
Financial Statements (Unaudited)
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||
3
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|||
4
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|||
5
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|||
6
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|||
7
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|||
2.
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15
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3.
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20
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4.
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20
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Part
II - Other Information
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|||
Item
2.
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21
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||
3.
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21
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||
6.
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22
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||
23
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September 30,
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June 30,
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|||||||
2007
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2007
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|||||||
Assets
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(Unaudited)
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|||||||
Current
assets:
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||||||||
Cash
and cash equivalents
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$ |
3,943,241
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$ |
5,163,844
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||||
Available-for-sale
securities
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6,350,000
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6,350,000
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||||||
Accounts
receivable, less allowance for uncollectible accounts of approximately
$145,000 at September 30, 2007 and $142,000 at June 30,
2007
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3,134,753
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2,269,193
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||||||
Finance
receivables
|
360,855
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330,692
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||||||
Inventory
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2,655,242
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3,033,792
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||||||
Prepaid
expenses and other current assets
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421,636
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206,508
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||||||
Total
current assets
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16,865,727
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17,354,029
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||||||
Finance
receivables, less current portion
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417,681
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279,324
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||||||
Property
and equipment, net
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1,844,558
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1,876,754
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||||||
Intangibles,
net
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6,812,882
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7,122,032
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||||||
Goodwill
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7,663,208
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7,663,208
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||||||
Other
assets
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196,150
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196,150
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||||||
Total
assets
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$ |
33,800,206
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$ |
34,491,497
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||||
Liabilities
and shareholders’ equity
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||||||||
Current
liabilities:
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||||||||
Accounts
payable
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$ |
2,996,372
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$ |
3,945,894
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||||
Accrued
expenses
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3,548,771
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1,431,652
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||||||
Current
obligations under long-term debt
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691,472
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514,302
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||||||
Total
current liabilities
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7,236,615
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5,891,848
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||||||
Long-term
debt, less current portion
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563,864
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515,443
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||||||
Total
liabilities
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7,800,479
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6,407,291
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||||||
Commitments
and contingencies (Note 6)
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||||||||
Shareholders’
equity:
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||||||||
Preferred
stock, no par value:
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||||||||
Authorized
shares- 1,800,000
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||||||||
Series
A convertible preferred- Authorized shares-900,000; Issued and outstanding
shares- 520,392 as of September 30, 2007 and as of June 30, 2007
(liquidation preference of $14,586,926 at September 30,
2007)
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3,686,218
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3,686,218
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||||||
Common
stock, no par value:
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||||||||
Authorized
shares- 640,000,000;
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||||||||
Issued
and outstanding shares- 12,544,072 September 30, 2007 and 11,810,849
at
June 30, 2007
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176,001,378
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172,822,868
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||||||
Accumulated
deficit
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(153,687,869 | ) | (148,424,880 | ) | ||||
Total
shareholders’ equity
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25,999,727
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28,084,206
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||||||
Total
liabilities and shareholders’ equity
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$ |
33,800,206
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$ |
34,491,497
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Three
Months Ended September 30,
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||||||||
2007
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2006
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|||||||
Revenues:
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||||||||
Equipment
sales
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$ |
2,650,264
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$ |
1,670,807
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||||
License
and transaction fees
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705,392
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338,090
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||||||
Total
revenues
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3,355,656
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2,008,897
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||||||
Cost
of equipment
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2,272,492
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1,131,159
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||||||
Cost
of services
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563,988
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262,202
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||||||
Cost
of sales
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2,836,480
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1,393,361
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||||||
Gross
profit
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519,176
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615,536
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||||||
Operating
expenses:
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||||||||
Selling,
general and administrative
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5,392,034
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3,347,056
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||||||
Depreciation
and amortization
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500,627
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426,972
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||||||
Total
operating expenses
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5,892,661
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3,774,028
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||||||
Operating
loss
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(5,373,485 | ) | (3,158,492 | ) | ||||
Other
income (expense):
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||||||||
Interest
income
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148,892
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32,543
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||||||
Interest
expense:
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||||||||
Coupon
or stated rate
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(38,396 | ) | (297,380 | ) | ||||
Non-cash
interest and amortization of debt discount
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-
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(256,985 | ) | |||||
Total
interest expense
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(38,396 | ) | (554,365 | ) | ||||
Total
other income (expense)
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110,496
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(521,822 | ) | |||||
Net
loss
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(5,262,989 | ) | (3,680,314 | ) | ||||
Cumulative
preferred dividends
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(390,294 | ) | (391,157 | ) | ||||
Loss
applicable to common shares
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$ | (5,653,283 | ) | $ | (4,071,471 | ) | ||
Loss
per common share (basic and diluted)
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$ | (0.47 | ) | $ | (0.63 | ) | ||
Weighted
average number of common shares outstanding (basic and
diluted)
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12,031,530
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6,451,553
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Series
A Convertible Preferred Stock
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Common
Stock
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Accumulated
Deficit
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Total
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|||||||||||||
Balance,
June 30, 2007
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$ |
3,686,218
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$ |
172,822,868
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$ | (148,424,880 | ) | $ |
28,084,206
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|||||||
Issuance
of 474,385 shares of common stock to an accredited investor at varying
prices per share, less issuance costs
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-
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3,490,890
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-
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3,490,890
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||||||||||||
Exercise
of 25,989 warrants at $6.40 per Share
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-
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166,330
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-
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166,330
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||||||||||||
Retirement
of 400 shares of common Stock
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-
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(5,600 | ) |
-
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(5,600 | ) | ||||||||||
Issuance
of 8,000 shares of common stock to employees under the 2007-A Stock
Compensation Plan
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-
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81,355
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-
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81,355
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||||||||||||
Reclassification
of charges from Long-Term Equity Incentive Program to share-based
liability
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-
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(599,311 | ) |
-
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(599,311 | ) | ||||||||||
Charges
incurred in connection with the vesting of common stock for employee
compensation
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-
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14,569
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-
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14,569
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||||||||||||
Charges
incurred in connection with stock options
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-
|
30,277
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-
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30,277
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||||||||||||
Net
loss
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-
|
-
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(5,262,989 | ) | (5,262,989 | ) | ||||||||||
Balance,
September 30, 2007
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$ |
3,686,218
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$ |
176,001,378
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$ | (153,687,869 | ) | $ |
25,999,727
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Three
months ended
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||||||||
September 30,
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||||||||
2007
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2006
|
|||||||
Operating
activities
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||||||||
Net
loss
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$ | (5,262,989 | ) | $ | (3,680,314 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
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||||||||
Charges
incurred in connection with the vesting and issuance of common stock
for
employee compensation
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1,587,355
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262,683
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||||||
Charges
incurred in connection with stock options
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30,277
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94,343
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||||||
Non-cash
interest and amortization of debt discount
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-
|
256,985
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||||||
Gain
on repayment of senior notes
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-
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(22,310 | ) | |||||
Bad
debt expense
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5,012
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56,249
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||||||
Amortization
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309,150
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309,150
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||||||
Depreciation
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191,477
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117,822
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||||||
Changes
in operating assets and liabilities:
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||||||||
Accounts
receivable
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(870,572 | ) | (241,795 | ) | ||||
Finance
receivables
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(168,520 | ) | (9,021 | ) | ||||
Inventory
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378,550
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(58,486 | ) | |||||
Prepaid
expenses and other assets
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(215,128 | ) | (30,767 | ) | ||||
Accounts
payable
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(949,522 | ) | (89,178 | ) | ||||
Accrued
expenses
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26,377
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36,468
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||||||
Net
cash used in operating activities
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(4,938,533 | ) | (2,998,171 | ) | ||||
Investing
activities
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||||||||
Purchase
of property and equipment, net
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(95,356 | ) | (93,623 | ) | ||||
Net
cash used in investing activities
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(95,356 | ) | (93,623 | ) | ||||
Financing
activities
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||||||||
Net
proceeds from the issuance of common stock
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3,651,620
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1,803,500
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||||||
Repayment
of senior notes
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-
|
(89,240 | ) | |||||
Proceeds
from the issuance of long-term debt
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239,740
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-
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||||||
Repayment
of long-term debt
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(78,074 | ) | (28,208 | ) | ||||
Net
cash provided by financing activities
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3,813,286
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1,686,052
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||||||
Net
decrease in cash and cash equivalents
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(1,220,603 | ) | (1,405,742 | ) | ||||
Cash
and cash equivalents at beginning of period
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5,163,844
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2,866,801
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||||||
Cash
and cash equivalents at end of period
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$ |
3,943,241
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$ |
1,461,059
|
||||
Supplemental
disclosures of cash flow information:
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||||||||
Cash
paid for interest
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$ |
52,970
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$ |
286,022
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||||
Equipment
under capital lease
|
$ |
63,925
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$ |
-
|
||||
Conversion
of senior notes to common stock
|
$ |
-
|
$ |
500
|
||||
Conversion
of convertible preferred stock to common stock
|
$ |
-
|
$ |
8,142
|
||||
Conversion
of convertible preferred dividends to common stock
|
$ |
-
|
$ |
15,000
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September 30
|
June 30
|
|||||||
2007
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2007
|
|||||||
(unaudited)
|
||||||||
Accrued
compensation and related sales commissions
|
$ |
614,978
|
$ |
502,431
|
||||
Accrued
interest
|
-
|
14,574
|
||||||
Accrued
professional fees
|
115,171
|
207,786
|
||||||
Accrued
taxes and filing fees
|
328,000
|
202,428
|
||||||
Advanced
customer billings
|
193,514
|
96,264
|
||||||
Accrued
consulting fees
|
28,115
|
5,300
|
||||||
Accrued
share-based payment liability
|
1,956,662
|
-
|
||||||
Accrued
other
|
312,331
|
402,869
|
||||||
$ |
3,548,771
|
$ |
1,431,652
|
Stock
Issuance And Withholding Agreement between the Company and George
R.
Jensen, Jr., dated September 28,
2007
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Stock
Issuance And Withholding Agreement between the Company and Stephen
P.
Herbert dated September 28, 2007
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Stock
Issuance Agreement between the Company and David M. DeMedio dated
September 28, 2007
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Certifications
of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934.
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Certifications
of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934.
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Certifications
by the Chief Executive Officer and Chief Financial Officer pursuant
to 18
USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
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USA
TECHNOLOGIES, INC.
|
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Date: November
12, 2007
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/s/
George R. Jensen, Jr.
|
George
R. Jensen, Jr., Chairman and
|
|
Chief
Executive Officer
|
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Date: November
12, 2007
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/s/
David M. DeMedio
|
David
M. DeMedio,
|
|
Chief
Financial Officer
|