T
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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 or organization)
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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 o
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Smaller
reporting company T
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December 31,
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June 30,
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|||||||
2009
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2009
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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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$ | 11,572,878 | $ | 6,748,262 | ||||
Accounts
receivable, less allowance for uncollectible accounts of $111,000 and
$42,000, respectively
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1,896,257 | 1,468,052 | ||||||
Finance
receivables
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883,436 | 212,928 | ||||||
Inventory,
net
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2,265,549 | 1,671,226 | ||||||
Prepaid
expenses and other current assets
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1,021,029 | 1,078,026 | ||||||
Total
current assets
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17,639,149 | 11,178,494 | ||||||
Finance
receivables, less current portion
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415,848 | 121,624 | ||||||
Property
and equipment, net
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2,161,896 | 2,081,909 | ||||||
Intangibles,
net
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4,327,853 | 4,845,053 | ||||||
Goodwill
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7,663,208 | 7,663,208 | ||||||
Other
assets
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45,052 | 90,090 | ||||||
Total
assets
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$ | 32,253,006 | $ | 25,980,378 | ||||
Liabilities
and shareholders’ equity
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||||||||
Current
liabilities:
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||||||||
Accounts
payable
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$ | 3,107,488 | $ | 3,794,691 | ||||
Accrued
expenses
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2,941,927 | 1,393,356 | ||||||
Current
obligations under long-term debt
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369,951 | 494,850 | ||||||
Total
current liabilities
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6,419,366 | 5,682,897 | ||||||
Long-term
debt, less current portion
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223,412 | 325,209 | ||||||
Total
liabilities
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6,642,778 | 6,008,106 | ||||||
Commitments
and contingencies (Note 7)
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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;
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||||||||
Issued
and outstanding shares- 488,657 and 510,270, respectively (liquidation
preference of $15,163,344 and $15,451,307, respectively)
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3,461,534 | 3,614,554 | ||||||
Common
stock, no par value:
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||||||||
Authorized
shares- 640,000,000;
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||||||||
Issued
and outstanding shares- 22,725,701 and 15,423,022,
respectively
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207,959,115 | 194,948,693 | ||||||
Accumulated
deficit
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(185,810,421 | ) | (178,590,975 | ) | ||||
Total
shareholders’ equity
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25,610,228 | 19,972,272 | ||||||
Total
liabilities and shareholders’ equity
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$ | 32,253,006 | $ | 25,980,378 |
Three
months ended
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Six
months ended
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|||||||||||||||
December 31,
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December 31,
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|||||||||||||||
2009
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2008
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2009
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2008
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Revenues:
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Equipment
sales
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$ | 1,697,053 | $ | 1,244,694 | $ | 3,634,460 | $ | 3,283,609 | ||||||||
License
and transaction fees
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2,073,786 | 1,425,535 | 3,964,015 | 2,781,499 | ||||||||||||
Total
revenues
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3,770,839 | 2,670,229 | 7,598,475 | 6,065,108 | ||||||||||||
Cost
of equipment
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1,080,878 | 896,742 | 2,390,235 | 2,330,586 | ||||||||||||
Cost
of services
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1,680,565 | 1,108,358 | 3,168,722 | 2,165,984 | ||||||||||||
Cost
of sales
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2,761,443 | 2,005,100 | 5,558,957 | 4,496,570 | ||||||||||||
Gross
profit
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1,009,396 | 665,129 | 2,039,518 | 1,568,538 | ||||||||||||
Operating
expenses:
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Selling,
general and administrative
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4,857,366 | 3,776,302 | 8,423,143 | 8,215,833 | ||||||||||||
Depreciation
and amortization
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400,366 | 388,252 | 785,431 | 807,032 | ||||||||||||
Total
operating expenses
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5,257,732 | 4,164,554 | 9,208,574 | 9,022,865 | ||||||||||||
Operating
loss
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(4,248,336 | ) | (3,499,425 | ) | (7,169,056 | ) | (7,454,327 | ) | ||||||||
Other
income (expense):
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Interest
income
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12,699 | 96,572 | 27,636 | 224,537 | ||||||||||||
Interest
expense
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(9,719 | ) | (26,180 | ) | (30,135 | ) | (53,138 | ) | ||||||||
Total
other income (expense), net
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2,980 | 70,392 | ) | (2,499 | ) | 171,399 | ||||||||||
Net
loss
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(4,245,356 | ) | (3,429,033 | ) | (7,171,555 | ) | (7,282,928 | ) | ||||||||
Cumulative
preferred dividends
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- | - | (382,703 | ) | (390,294 | ) | ||||||||||
Loss
applicable to common shares
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(4,245,356 | ) | (3,429,033 | ) | (7,554,258 | ) | (7,673,222 | ) | ||||||||
Loss
per common share (basic and diluted)
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$ | (0.19 | ) | $ | (0.23 | ) | $ | (0.36 | ) | $ | (0.51 | ) | ||||
Weighted
average number of common shares outstanding (basic and
diluted)
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22,728,252 | 15,196,988 | 21,274,089 | 15,183,102 |
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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, 2009
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$ | 3,614,554 | $ | 194,948,693 | $ | (178,590,975 | ) | $ | 19,972,272 | |||||||
Issuance
of 7,285,792 shares of common stock at $2.00 per share less issuance costs
of $1,613,425
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12,958,159 | 12,958,159 | ||||||||||||||
Issuance
of 22,000 fully-vested shares of common stock to employees and vesting of
shares granted under the 2008 Stock Incentive Plan
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61,931 | 61,931 | ||||||||||||||
Retirement
of 5,113 shares of common stock
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(9,668 | ) | (9,668 | ) | ||||||||||||
Retirement
of 21,613 shares of preferred stock
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(153,020 | ) | (47,891 | ) | (200,911 | ) | ||||||||||
Net
loss
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- | - | (7,171,555 | ) | (7,171,555 | ) | ||||||||||
Balance,
December 31, 2009
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$ | 3,461,534 | $ | 207,959,115 | $ | (185,810,421 | ) | $ | 25,610,228 |
Six
months ended
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December
31,
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2009
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2008
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Operating
activities
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Net
loss
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$ | (7,171,555 | ) | $ | (7,282,928 | ) | ||
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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61,931 | 838,304 | ||||||
Charges
incurred (reduced) in connection with the Long-term Equity Incentive
Program
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104,730 | (268,407 | ) | |||||
Bad
debt expense (recovery)
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67,432 | (27,380 | ) | |||||
Amortization
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517,200 | 523,179 | ||||||
Depreciation,
$56,742 and $20,721 of which is allocated to cost of services for the six
months ended December 31, 2009 and 2008
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324,973 | 325,520 | ||||||
Changes
in operating assets and liabilities:
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Accounts
receivable
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(495,637 | ) | 2,601,586 | |||||
Finance
receivables
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(964,732 | ) | 246,163 | |||||
Inventory
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(594,323 | ) | (182,789 | ) | ||||
Prepaid
expenses and other assets
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188,026 | 408,822 | ||||||
Accounts
payable
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(687,203 | ) | (1,500,279 | ) | ||||
Accrued
expenses
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1,443,841 | (524,485 | ) | |||||
Net
cash used in operating activities
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(7,205,317 | ) | (4,842,694 | ) | ||||
Investing
activities
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Purchase
of property and equipment, net
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(387,623 | ) | (170,100 | ) | ||||
Net
proceeds from redemption/sale of available-for-sale
securities
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- | 2,025,000 | ||||||
Net
cash provided by (used in) investing activities
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(387,623 | ) | 1,854,900 | |||||
Financing
activities
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Net
proceeds from the issuance (retirement) of common stock
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12,948,491 | (315,304 | ) | |||||
Payments
for the (retirement) of preferred stock
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(200,911 | ) | (88,048 | ) | ||||
Repayment
of long-term debt
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(330,024 | ) | (467,908 | ) | ||||
Net
cash provided by (used in) financing activities
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12,417,556 | (871,260 | ) | |||||
Net
increase (decrease) in cash and cash equivalents
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4,824,616 | (3,859,054 | ) | |||||
Cash
and cash equivalents at beginning of period
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6,748,262 | 9,970,691 | ||||||
Cash
and cash equivalents at end of period
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$ | 11,572,878 | $ | 6,111,637 | ||||
Supplemental
disclosures of cash flow information:
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Prepaid
insurance financed with long-term debt
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$ | 85,991 | $ | 225,785 | ||||
Prepaid
maintenance contracts financed with long-term debt
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- | 37,429 | ||||||
Cash
paid for interest
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$ | 11,976 | $ | 54,351 | ||||
Equipment
acquired under capital lease
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$ | 17,337 | $ | 424,213 |
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December 31
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June 30
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2009
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2009
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(unaudited)
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Notes
receivable
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$ | 137,132 | $ | 334,552 | ||||
Lease
receivables
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1,162,152 | - | ||||||
Total
finance receivables
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1,299,284 | 334,552 | ||||||
Less
current portion
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883,436 | 212,928 | ||||||
Non-current
portion of finance receivables
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$ | 415,848 | $ | 121,624 |
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December 31
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June 30
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2009
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2009
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(unaudited)
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Accrued
compensation and sales commissions
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343,828 | $ | 318,792 | |||||
Accrued
proxy costs and legal settlement
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1,639,783 | - | ||||||
Accrued
professional fees, exclusive of proxy costs
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290,063 | 439,759 | ||||||
Accrued
taxes and filing fees
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221,676 | 206,875 | ||||||
Advanced
customer billings
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92,275 | 101,942 | ||||||
Accrued
share-based payment liability
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104,730 | - | ||||||
Accrued
other
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249,572 | 325,988 | ||||||
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2,941,927 | $ | 1,393,356 |
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December 31
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June 30
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2009
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2009
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(unaudited)
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Capital
lease obligations
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$ | 435,745 | $ | 580,383 | ||||
Loan
agreements
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157,618 | 239,676 | ||||||
Total
long-term debt
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593,363 | 820,059 | ||||||
Less
current portion
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369,951 | 494,850 | ||||||
Non-current
portion of long-term debt
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$ | 223,412 | $ | 325,209 |
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Amended
and Restated Bylaws of the Company dated February 4,
2010.
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Certification
of the Chief Executive Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934.
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Certification
of the Chief Financial Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934.
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Certification
of the Chief Executive Officer pursuant to 18 USC Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
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Certification
of the 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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/s/ George R. Jensen,
Jr.
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George
R. Jensen, Jr., Chairman
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and
Chief Executive Officer
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/s/ David M. DeMedio
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David
M. DeMedio,
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Chief
Financial Officer
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