VANCOUVER, British Columbia, Nov. 12, 2008 (GLOBE NEWSWIRE) -- LML Payment Systems Inc. ("LML") (Nasdaq:LMLP), a leading payments technology provider of financial payment solutions for e-commerce and traditional businesses, reports results for its second quarter and six month period ended September 30, 2008.
Revenue for the three months ended September 30, 2008 was approximately $3,087,000, compared to $3,183,000 in revenue for the three months ended September 30, 2007. GAAP net income for the quarter was approximately $65,000, or $0.00 per share, compared to GAAP net loss of approximately $181,000, or $0.01 per share, for the second quarter fiscal 2008, an improvement of $247,000. Non-GAAP net income for the second quarter fiscal 2009 was approximately $502,000 or $0.02 per share compared to approximately $417,000 or $0.02 per share for the second quarter last year. Non-GAAP net income excludes stock-based compensation, depreciation and amortization, and other non-recurring items. A reconciliation of GAAP to non-GAAP financial measures is attached.
Revenue for the six months ended September 30, 2008 was approximately $6,264,000, an increase of approximately 35%, from revenue of $4,638,000 for the six months ended September 30, 2007. GAAP net income for the same period was approximately $19,000, or $0.00 per share, compared to GAAP net loss of approximately $429,000 or $0.02 per share, for the same period during fiscal 2008, an improvement of $448,000. Non-GAAP net income for the six months ended September 30, 2008 was approximately $1,112,000 or $0.04 per share compared to approximately $433,000 or $0.02 per share for the same period last year.
Q2 Highlights
* 595 new customers added; * Net income of $65,000 versus net loss of $181,000 -- an improvement of $247,000.
6 Months Highlights
* Revenue increase of 35% to $6.3 million * Net income of $19,000 versus net loss of $429,000 -- an improvement of $448,000.
"Achieving profitability on a net income basis for both the quarter and the six month period is a milestone for the company. Our strategy of focusing on providing electronic payment solutions for both brick and mortar and eCommerce merchants is paying off. Our transaction payment processing business grew over 15%. Our value proposition to merchants remains strong and our channel partners remain vibrant as evidenced by the addition of 595 new merchants during the quarter. We also continued to make progress with respect to our intellectual property and anticipate having more to report in this regard in future quarters," said Patrick H. Gaines, President and Chief Executive Officer.
Conference Call
Management will host a conference call today at 1:30pm Pacific Time (4:30pm Eastern Time) to discuss these results. To participate in the conference call, please dial in 5-10 minutes before the start of the call and follow the operator's instruction. If you are calling from the United States or Canada, please dial 800-954-0584. International callers please dial 212-231-2900.
If you are unable to join the call, a telephone replay will be available through November 24, 2008 by dialing 800-633-8284 from within the U.S. or Canada, or 402-977-9140 if calling internationally. Please reference reservation number 21399396 when prompted.
About LML Payment Systems Inc. (www.lmlpayment.com)
LML Payment Systems Inc., through its subsidiaries Beanstream Internet Commerce Inc. in Canada and LML Payment Systems Corp. in the U.S., is a leading provider of financial payment processing solutions for e-commerce and traditional businesses. We provide credit card processing, online debit, electronic funds transfer, automated clearinghouse payment processing and authentication services, along with routing of selected transactions to third party processors and banks for authorization and settlement. Our intellectual property estate, owned by subsidiary LML Patent Corp., includes U.S. Patent No. RE40220, No. 6,354,491, No. 6,283,366, No. 6,164,528, and No. 5,484,988 all of which relate to electronic check processing methods and systems.
GAAP versus Non-GAAP Financial Information
In addition to GAAP financial measures, the Corporation has provided supplemental non-GAAP financial measures of net income and earnings per share, which exclude certain non-cash and non-recurring items. For purposes of this news release, non-GAAP net income and earnings per share exclude stock-based compensation expense under CICA 3870 and SFAS 123R, depreciation and amortization expense, and certain non-recurring items. A reconciliation of adjustments of non-GAAP to GAAP results for the second quarter and six month period and prior periods is included in the enclosed table. The Corporation believes that non-GAAP financial measures are useful in assessing operating performance as they provide an additional basis to evaluate our ability to incur and service debt and to fund capital expenditures. In addition, non-GAAP financial information may provide management and investors with an enhanced understanding of our operating results and overall financial performance. Non-GAAP financial measures are not meant to be considered in isolation and should not be considered as alternatives to financial information prepared in accordance with GAAP. Furthermore, our method of calculating the non-GAAP financial measures presented in this news release may differ from methods used by other companies, and as a result, the non-GAAP financial measures disclosed herein may not be comparable to other similarly titled measures used by other companies.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing verbs such as "aims," "anticipates," "estimates," "expects," "intends," "plans," "predicts," "projects" or "targets" or nouns corresponding to such verbs. Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be evaluated by events that will occur in the future. Forward-looking statements are based on the opinions and estimates of the management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect LML's actual results include, among others, the impact, if any, of stock-based compensation charges, the potential failure to establish and maintain strategic relationships, inability to integrate recent and future acquisitions, inability to develop new products or product enhancements on a timely basis, inability to protect our proprietary rights or to operate without infringing the patents and proprietary rights of others, and quarterly and seasonal fluctuations in operating results. More information about factors that potentially could affect LML's financial results is included in LML's quarterly reports on Form 10-Q and our most recent annual report on Form 10-K filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. Except as required by law, LML undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.
LML PAYMENT SYSTEMS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(In U.S. Dollars, except share data)
(Unaudited)
Three Months Ended Six Months Ended
September 30 September 30
-------------------------- --------------------------
2008 2007 2008 2007
-------------------------- --------------------------
REVENUE $ 3,086,974 $ 3,182,548 $ 6,264,446 $ 4,638,265
COST OF
REVENUE
(includes
stock-based
compensation
("s.b.c.")
expense of
$37,788 for
three months
ended
September 30,
2008 (three
months ended
September 30,
2007 - $9,801)
and $75,601
for six
months ended
September 30,
2008 (six
months ended
September 30,
2007 -
$19,496)) 1,504,746 1,312,148 3,018,024 1,810,376
-------------------------- --------------------------
GROSS PROFIT
(excludes
amortization
and deprecia-
tion expense) 1,582,228 1,870,400 3,246,422 2,827,889
OPERATING
EXPENSES
General and
administrative
(includes
s.b.c. expense
of $289,642
for three
months ended
September 30,
2008 (three
months ended
September 30,
2007 -
$104,279) and
$596,959 for
six months
ended
September 30,
2008 (six
months ended
September 30,
2007 -
$234,019)) 1,183,351 1,217,016 2,248,115 2,316,886
Sales and
marketing
(includes
s.b.c.
expense of
$765 for
three months
ended
September 30,
2008 (three
months ended
September 30,
2007 - $-)
and $1,521
for six
months ended
September 30,
2008 (six
months ended
September 30,
2007 - $-)) 78,084 52,116 160,566 116,692
Product
development
and enhance-
ment
(includes
s.b.c.
expense of
$12,233 for
three
months ended
September 30,
2008 (three
months ended
September 30,
2007 - $-)
and $24,333
for six
months ended
September 30,
2008 (six
months ended
September
30, 2007 -
$-)) 67,219 52,634 139,310 52,634
Amortization
and
depreciation 198,195 134,738 392,552 261,254
-------------------------- --------------------------
INCOME BEFORE
OTHER INCOME
(EXPENSES)
AND INCOME
TAXES 55,379 413,896 305,879 80,423
Foreign
exchange
gain (loss) 163,805 (410,872) 98,968 (427,096)
Other income 10,654 10,833 18,975 19,542
Gain on
sale of
assets -- -- 864 1,700
Interest
income 81,532 123,792 143,969 237,103
Interest
expense (53,505) (112,179) (158,885) (130,167)
-------------------------- --------------------------
INCOME (LOSS)
BEFORE INCOME
TAXES 257,865 25,470 409,770 (218,495)
Income taxes 192,520 206,693 390,944 210,893
-------------------------- --------------------------
NET INCOME
(LOSS) 65,345 (181,223) 18,826 (429,388)
DEFICIT,
beginning of
period (34,253,141) (32,233,959) (34,206,622) (31,985,794)
-------------------------- --------------------------
DEFICIT, end
of period $(34,187,796) $(32,415,182) $(34,187,796) $(32,415,182)
========================== ==========================
EARNINGS
(LOSS) PER
SHARE, basic
and diluted $ 0.00 $ (0.01) $ 0.00 $ (0.02)
========================== ==========================
WEIGHTED
AVERAGE SHARES
OUTSTANDING
Basic 26,762,797 22,334,172 26,553,465 21,287,963
Diluted 26,762,797 22,334,172 26,553,465 21,287,963
LML PAYMENT SYSTEMS INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In U.S. Dollars)
(Unaudited)
Three Months Ended Six Months Ended
September 30 September 30
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
GAAP Net Income
(Loss) $ 65,345 $ (181,223) $ 18,826 $ (429,388)
Add stock-based
compensation 340,428 114,080 698,414 253,515
Add stock-based
compensation -
future income taxes -- 11,185 -- 11,185
Add amortization and
depreciation 198,195 134,738 392,552 261,254
Less unrealized
foreign exchange
(gain) loss (101,825) 337,876 3,340 337,876
Less gain on sale
of assets -- -- (864) (1,700)
---------- ---------- ---------- ----------
Non-GAAP Net Income $ 502,143 $ 416,656 $1,112,268 $ 432,742
========== ========== ========== ==========
GAAP Net Earnings
(Loss) Per Share,
basic $ 0.00 $ (0.01) $ 0.00 $ (0.02)
Add stock-based
compensation 0.01 0.01 0.03 0.01
Add stock-based
compensation -
future income taxes -- 0.00 -- 0.00
Add amortization and
depreciation 0.01 0.01 0.01 0.01
Less unrealized
foreign exchange
(gain) loss (0.00) 0.02 0.00 0.02
Less gain on sale
of assets -- -- (0.00) (0.00)
---------- ---------- ---------- ----------
Non-GAAP Net Earnings
Per Share, basic $ 0.02 $ 0.02 $ 0.04 $ 0.02
========== ========== ========== ==========
GAAP Net Earnings
(Loss) Per Share,
diluted $ 0.00 $ (0.01) $ 0.00 $ (0.02)
Add stock-based
compensation 0.01 0.01 0.03 0.01
Add stock-based
compensation -
future income taxes -- 0.00 -- 0.00
Add amortization and
depreciation 0.01 0.01 0.01 0.01
Less unrealized
foreign exchange
(gain) loss (0.00) 0.02 0.00 0.02
Less gain on sale of
assets -- -- (0.00) (0.00)
---------- ---------- ---------- ----------
Non-GAAP Net Earnings
Per Share, diluted $ 0.02 $ 0.02 $ 0.04 $ 0.02
========== ========== ========== ==========
LML PAYMENT SYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars, except as noted below)
(Unaudited)
September 30, March 31,
2008 2008
----------- -----------
ASSETS
Current Assets
Cash and cash equivalents $ 5,935,401 $ 9,749,768
Funds held for merchants 11,924,002 5,833,617
Restricted cash 125,000 250,000
Accounts receivable, less allowances
of $32,168 and $32,168, respectively 581,145 719,301
Prepaid expenses 282,842 273,751
----------- -----------
Total current assets 18,848,390 16,826,437
Property and equipment, net 267,426 246,828
Patents, net 706,441 788,473
Restricted cash 148,186 153,619
Other assets 22,956 23,247
Goodwill 17,874,202 15,903,077
Intangible assets, net 5,453,062 5,700,637
----------- -----------
TOTAL ASSETS $43,320,663 $39,642,318
=========== ===========
LIABILITIES
Current Liabilities
Accounts payable $ 786,794 $ 1,745,679
Accrued liabilities 716,007 648,661
Corporate taxes payable 600 573,240
Funds due to merchants 11,924,002 5,833,617
Current portion of obligations under
capital lease 198,158 203,366
Current portion of promissory notes 2,396,166 2,731,923
Current portion of deferred revenue 1,325,599 1,448,921
----------- -----------
Total current liabilities 17,347,326 13,185,407
Obligations under capital lease 68,955 177,573
Promissory notes -- 2,435,460
Deferred revenue 3,968,505 4,606,379
----------- -----------
TOTAL LIABILITIES 21,384,786 20,404,819
----------- -----------
SHAREHOLDERS' EQUITY
Capital Stock
Class A, preferred stock, CAD $1.00
par value, 150,000,000 shares
authorized, issuable in series, none
issued or outstanding -- --
Class B, preferred stock, CAD $1.00
par value, 150,000,000 shares
authorized, issuable in series, none
issued or outstanding -- --
Common shares, no par value, 100,000,000
shares authorized, 27,116,408 and
26,341,832 issued and outstanding,
respectively 50,039,568 48,071,980
Accumulated other comprehensive loss (5,496) (19,046)
Contributed surplus 6,089,601 5,391,187
Deficit (34,187,796) (34,206,622)
----------- -----------
Total shareholders' equity 21,935,877 19,237,499
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $43,320,663 $39,642,318
=========== ===========
LML PAYMENT SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars)
(Unaudited)
Three Months Ended Six Months Ended
September 30 September 30
---------------------- ----------------------
2008 2007 2008 2007
---------------------- ----------------------
Operating Activities:
Net income (loss) $ 65,345 $ (181,223) $ 18,826 $ (429,388)
Adjustments to
reconcile net
income (loss) to
net cash provided
by operating
activities
Amortization and
depreciation 198,195 134,738 392,552 261,254
Gain on sale of
assets -- -- (864) (1,700)
Stock-based
compensation 340,428 114,080 698,414 253,515
Stock-based
compensation -
future income
taxes -- 11,185 -- 11,185
Unrealized
foreign exchange
(gain) loss (101,825) 337,876 3,340 337,876
Changes in non-cash
operating working
capital
Restricted cash -- -- 125,000 --
Accounts receivable 53,049 (143,088) 135,609 (190,916)
Prepaid expenses (34,548) 60,472 (10,033) 116,632
Other assets -- (8,490) -- (8,490)
Accounts payable
and accrued
liabilities (94,659) (258,253) (833,586) (360,237)
Corporate taxes
payable (630,432) 126,918 (572,993) 126,918
Deferred revenue (373,937) (263,519) (759,499) (629,275)
---------------------- ----------------------
Net cash used in
operating activities (578,384) (69,304) (803,234) (512,626)
---------------------- ----------------------
Investing Activities:
Acquisition of
Beanstream, net of
cash acquired -- (646,125) -- (3,971,388)
Acquisition of
property and
equipment (36,057) (22,538) (89,403) (106,923)
Proceeds from
disposal of equipment -- -- 5,500 1,700
Development of patents (46) (3,396) (1,652) (7,938)
---------------------- ----------------------
Net cash used in
investing activities (36,103) (672,059) (85,555) (4,084,549)
---------------------- ----------------------
Financing Activities:
Payments on capital
leases (49,124) (89,311) (93,396) (177,074)
Payment on
promissory notes -- -- (2,843,974) --
Share capital
financing costs -- -- (3,537) --
Proceeds from
exercise of stock
options -- 77,438 -- 77,438
---------------------- ----------------------
Net cash used in
financing activities (49,124) (11,873) (2,940,907) (99,636)
---------------------- ----------------------
Effects of foreign
exchange rate
changes on cash and
cash equivalents (18,660) 303,786 15,329 303,786
DECREASE IN CASH AND
CASH EQUIVALENTS (682,271) (449,450) (3,814,367) (4,393,025)
Cash and cash
equivalents,
beginning of period 6,617,672 6,219,433 9,749,768 10,163,008
---------------------- ----------------------
Cash and cash
equivalents, end
of period $5,935,401 $5,769,983 $5,935,401 $5,769,983
====================== ======================
Supplemental
disclosure of cash
flow information
Interest paid $ 5,399 $ 16,470 $ 406,590 $ 34,457
Taxes paid $ 827,155 $ -- $ 972,419 $ 28,386
Non-cash investing
and financing
transactions not
included in cash
flows:
Issuance of common
shares pursuant
to earn-out
provision $1,971,125 $ -- $1,971,125 $ --