Fourth Quarter Revenue Increased 107 Percent and Revenue
for the Year Increased 73 Percent
Fourth Quarter Cash Flow was $801,000 and Cash Flow
for the Year was $540,000
VANCOUVER, B.C., June 17, 2008 (PRIME 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 fourth quarter and fiscal year ended March 31, 2008.
Revenue for the three months ended March 31, 2008 was approximately $3.3 million, an increase of approximately 107%, over the $1.6 million in revenue for the three months ended March 31, 2007. Non-GAAP net income for the fourth quarter fiscal 2008 was approximately $326,000 or $0.01 per share, a 36% increase, compared to approximately $240,000 or $0.01 per share for the fourth 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. GAAP net loss for the quarter was approximately $1.6 million, or $0.07 per share, compared to GAAP net income of approximately $86,000, or $0.01 per share, for the fourth quarter fiscal 2007. Net cash flows from operating activities were approximately $801,000 for the fourth quarter fiscal 2008.
Revenue for the fiscal year ended March 31, 2008 was approximately $11.3 million compared to approximately $6.6 million for the previous year, an increase of 73%. Non-GAAP net income for fiscal year 2008 was approximately $1.2 million or $0.05 per share compared to approximately $194,000 or $0.01 per share for fiscal 2007. Non-GAAP net income excludes stock-based compensation, depreciation and amortization, and other non-recurring items. GAAP net loss for fiscal 2008 was approximately $2.2 million, or $0.10 per share, compared to GAAP net loss of approximately $1.1 million, or $0.05 per share, for the previous year. Net cash flows from operating activities were approximately $540,000 for fiscal 2008.
Q4 Highlights
-- Revenue increased to $3.3 million -- a 107% increase
-- Produced positive cash flows from operations of $801,000
-- Received new U.S. patent regarding electronic check processing
methods and systems
Fiscal Year Highlights
-- Acquisition and integration of Beanstream Internet Commerce
Inc.
-- Repositioned check operations as part of business transition
-- Revenue increased to $11.3 million -- a 73% increase
-- Produced positive cash flows from operations of $540,000
"We are very pleased with these results. We undertook a significant number of important initiatives this past year and in many ways this has resulted in an important transition for the Company. We believe we have the products, the partners and the required strategy to take advantage of an exciting and growing market opportunity in electronic payments. We look forward to the coming year with a keen sense of anticipation as we expect to build on these results and continue to realize on our objectives," said Patrick H. Gaines, President and Chief Executive Officer of LML.
Conference Call
Management will host a conference call on June 18, 2008 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 800-769-9015. International callers please dial 212-231-2905.
If you are unable to join the call, a telephone replay will be available through June 29, 2008 by dialing 800-633-8284 from within the U.S. or Canada, or 402-977-9140 if calling internationally. Please reference reservation number 21385979 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 fourth quarter, fiscal year-end, 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
(In U.S. Dollars, except share data)
(Unaudited)
Year ended March 31,
---------------------------
2008 2007
------------ ------------
REVENUE $ 11,327,878 $ 6,554,191
COSTS AND EXPENSES
Cost of operations (includes
stock-based compensation expense
of $424,155 (2007-$81,321;
2006-$0)) 7,684,769 4,838,374
Sales, general and administrative
expenses (includes stock-based
compensation expense of $863,036
(2007-$796,012; 2006-$903,778)) 3,188,510 2,885,811
Amortization and depreciation 905,488 335,555
------------ ------------
LOSS BEFORE OTHER INCOME (EXPENSES)
AND INCOME TAXES (450,889) (1,505,549)
Foreign exchange gain (loss) (229,661) (2,545)
Other income (expenses), net (246,918) 616,571
(Loss) gain on disposal/abandonment
of capital assets (726,325) 7,000
Interest income 406,063 475,368
Interest expense (358,756) (12,700)
Settlement expenses -- (45,000)
Due diligence expenses -- (567,562)
------------ ------------
LOSS BEFORE INCOME TAXES (1,606,486) (1,034,417)
Income taxes 614,342 38,446
------------ ------------
NET LOSS (2,220,828) (1,072,863)
============ ============
NET LOSS PER SHARE, basic and
diluted (0.10) (0.05)
============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING, basic and diluted 21,869,404 20,206,412
============ ============
LML PAYMENT SYSTEMS INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In U.S. Dollars)
(Unaudited)
Three months ended Year Ended
March 31 March 31,
------------------------ ------------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
GAAP Net (Loss)
Income $(1,563,391) 86,328 $(2,220,828) $(1,072,863)
----------- ----------- ----------- -----------
Add stock-based
compensation 791,847 189,291 1,287,191 877,333
Add stock-based
compensation -
future income
taxes -- -- 11,185 21,646
Add amortization
and
depreciation 261,618 104,173 905,488 335,555
Less unrealized
foreign
exchange (gain)
loss (177,271) -- 177,847 --
Add
consolidation
of data centers
expenses 247,214 -- 247,214 --
Add non-
capitalizable
financing costs 39,675 -- 39,675 --
Add loss (gain)
on disposal/
abandonment of
capital assets 726,325 (4,000) 726,325 (7,000)
Add expenses
related to a
discontinued
operation -- -- -- 13,000
Less license
agreements
release
provisions -- -- -- (377,000)
Less state sales
tax refund -- (209,000) -- (209,000)
Add settlement
expenses -- 45,000 -- 45,000
Add due
diligence
expenses -- 28,585 -- 567,562
----------- ----------- ----------- -----------
Non-GAAP Net
Income 326,017 240,377 1,174,097 194,233
=========== =========== =========== ===========
GAAP Net (Loss)
Income Per
Share, basic $(0.07) $0.01 $(0.10) $(0.05)
Add stock-based
compensation 0.04 0.01 0.06 0.04
Add stock-based
compensation -
future income
taxes -- -- -- --
Add amortization
and
depreciation 0.01 -- 0.04 0.02
Less unrealized
foreign
exchange (gain)
loss (0.01) -- 0.01 --
Add consolidation
of data centers
expenses 0.01 -- 0.01 --
Add non-
capitalizable
financing costs -- -- -- --
Add loss (gain)
on disposal/
abandonment of
capital assets 0.03 -- 0.03 --
Add expenses
related to a
discontinued
operation -- -- -- --
Less license
agreements
release
provisions -- -- -- (0.02)
Less state sales
tax refund -- (0.01) -- (0.01)
Add settlement
expenses -- -- -- --
Add due
diligence
expenses -- -- -- 0.03
----------- ----------- ----------- -----------
Non-GAAP Net
Income Per
Share, basic $0.01 $0.01 $0.05 $0.01
=========== =========== =========== ===========
GAAP Net (Loss)
Income Per
Share, diluted $(0.07) $ -- $(0.09) $(0.05)
Add stock-based
compensation 0.04 0.01 0.05 0.04
Add stock-based
compensation -
future income
taxes -- -- -- --
Add amortization
and
depreciation 0.01 0.01 0.04 0.02
Less unrealized
foreign
exchange (gain)
loss (0.01) -- 0.01 --
Add
consolidation
of data centers
expenses 0.01 -- 0.01 --
Add non-
capitalizable
financing costs -- -- -- --
Add loss (gain)
on disposal/
abandonment of
capital assets 0.03 -- 0.03 --
Add expenses
related to a
discontinued
operation -- -- -- --
Less license
agreements
release
provisions -- -- -- (0.02)
Less state sales
tax refund -- (0.01) -- (0.01)
Add settlement
expenses -- -- -- --
Add due
diligence
expenses -- -- -- 0.03
----------- ----------- ----------- -----------
Non-GAAP Net
Income Per
Share, diluted $0.01 $0.01 $0.05 $0.01
=========== =========== =========== ===========
LML PAYMENT SYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars)
(Unaudited)
Year Ended March 31,
-------------------------------------
2008 2007
---------------- ----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 9,749,768 $ 10,163,008
Funds held for merchants 5,833,617 --
Restricted cash 250,000 250,000
Accounts receivable, less
allowance of $32,168
(2007:$23,388) 719,301 330,055
Prepaid expenses 273,751 405,213
---------------- ----------------
Total current assets 16,826,437 11,148,276
PROPERTY AND EQUIPMENT, net 246,828 1,362,003
PATENTS 788,473 943,985
RESTRICTED CASH 153,619 --
OTHER ASSETS 23,247 224,263
GOODWILL 15,903,077 --
INTANGIBLE ASSETS 5,700,637 --
---------------- ----------------
Total assets 39,642,318 13,678,527
================ ================
LIABILITIES
CURRENT LIABILITIES
Accounts payable 1,745,679 659,111
Accrued liabilities 648,661 309,677
Corporate taxes payable 573,240 --
Funds due to merchants 5,833,617 --
Current portion of obligations
under capital lease 203,366 360,179
Current portion of
promissory notes 2,731,923 --
Current portion of
deferred revenue 1,448,921 1,531,260
---------------- ----------------
Total current liabilities 13,185,407 2,860,227
OBLIGATIONS UNDER CAPITAL LEASE 177,573 726,806
PROMISSORY NOTES 2,435,460 --
DEFERRED REVENUE 4,606,379 5,859,628
---------------- ----------------
Total liabilities 20,404,819 9,446,661
================ ================
SHAREHOLDERS' EQUITY
CAPITAL STOCK
Class A, preferred stock,
$1.00 CDN par value, 150,000,000
shares authorized, issuable in
series, none issued or outstanding -- --
Class B, preferred stock, $1.00
CDN par value, 150,000,000 shares
authorized, issuable in series,
none issued or outstanding -- --
Common shares, no par value,
100,000,000 shares authorized,
26,341,832 issued and outstanding
(2007:20,207,094) 48,071,980 32,774,368
ACCUMULATED OTHER
COMPREHENSIVE LOSS (19,046) --
CONTRIBUTED SURPLUS 5,391,187 3,443,292
DEFICIT (34,206,622) (31,985,794)
---------------- ----------------
Total shareholders' equity 19,237,499 4,231,866
---------------- ----------------
Total liabilities
and shareholders' equity 39,642,318 13,678,527
================ ================
LML PAYMENT SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars)
(Unaudited)
Years ended March 31,
-----------------------------
2008 2007
-------------- --------------
OPERATING ACTIVITIES:
Net loss $ (2,220,828) $ (1,072,863)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities
Provisions for losses on
accounts receivable 10,942 37,347
Amortization and depreciation 905,488 335,555
(Gain) loss on disposal/abandonment
of capital assets 726,325 --
Stock-based compensation 1,287,210 877,334
Stock-based compensation -
future income taxes 11,185 21,646
Unrealized foreign exchange loss 177,847 --
Due diligence expenses -- 567,562
Other -- (7,252)
Changes in non-cash operating
working capital
Accounts receivable (130,694) 69,073
Prepaid expenses 214,414 (30,326)
Other assets (8,360) 14,447
Accounts payable and accrued
liabilities 323,496 (473,773)
Corporate taxes payable 582,538 --
Deferred revenue (1,339,390) 7,119,782
-------------- --------------
Net cash provided by (used in)
operating activities 540,173 7,458,532
-------------- --------------
INVESTING ACTIVITIES:
Other assets -- (776,170)
Acquisition of Beanstream, net
of cash acquired (7,286,834) --
Proceeds from disposal of
capital assets 107,900 7,252
Acquisition of property and equipment (144,241) (185,886)
Development of patents (10,804) (14,341)
-------------- --------------
Net cash (used in) provided
by investing activities (7,333,979) (969,145)
-------------- --------------
FINANCING ACTIVITIES:
Payments on capital leases (575,234) (79,588)
Payments on long-term borrowing -- (2,773)
Proceeds from exercise of
stock options 77,438 64,350
Proceeds from private placement
of common shares 7,200,000 --
Share capital financing costs (509,666) --
-------------- --------------
Net cash (used in) provided by
financing activities 6,192,538 (18,011)
-------------- --------------
Effects of foreign exchange rate
changes on cash and cash equivalents 188,028 --
(DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (413,240) 6,471,376
Cash and cash equivalents,
beginning of year 10,163,008 3,691,632
-------------- --------------
Cash and cash equivalents,
end of year 9,749,768 10,163,008
============== ==============
Cash and cash equivalents consist of:
Cash 8,348,906 9,041,704
Money market fund 107,233 1,121,304
Commercial paper 1,293,629 --
-------------- --------------
9,749,768 10,163,008
============== ==============
Supplemental disclosure of
cash flow information:
Interest paid 358,756 12,700
Taxes paid 603,157 16,800
============== ==============
Non-cash investing and financing
transactions not included in cash
flows:
Property and equipment acquired
through capital leases -- 1,146,473
============== ==============