VANCOUVER, British Columbia, Feb. 6, 2009 (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 third quarter and nine month period ended December 31, 2008.
Revenue for the three months ended December 31, 2008 was approximately $3 million, compared to $3.4 million in revenue for the three months ended December 31, 2007. GAAP net income for the quarter was approximately $281,000, or $0.01 per share, compared to GAAP net loss of approximately $228,000, or $0.01 per share, for the third quarter fiscal 2008, an improvement of $509,000. Non-GAAP net income for the third quarter fiscal 2009 was approximately $501,000 or $0.02 per share compared to approximately $414,000 or $0.02 per share for the third quarter last year.
Revenue for the nine months ended December 31, 2008 was approximately $9.3 million, an increase of approximately 15.8%, from revenue of approximately $8 million for the nine months ended December 31, 2007. GAAP net income for the same period was approximately $300,000, or $0.01 per share, compared to GAAP net loss of approximately $657,000 or $0.03 per share, for the same period during fiscal 2008, an improvement of $957,000. Non-GAAP net income for the nine months ended December 31, 2008 was approximately $1,613,000 or $0.06 per share compared to approximately $846,000 or $0.04 per share for the same period last year, an improvement of $767,000.
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.
Q3 Highlights * 271 new customers added; * Transaction Payment Processing business increased 12% * Net income of $281,000 versus net loss of $228,000 -- an improvement of $509,000. 9 Months Highlights * Revenue increase of 15.8% to $9.3 million * Net income of $300,000 versus net loss of $657,000 -- an improvement of $957,000.
"We are pleased with these results. Despite a troubled global economy, our transaction payment processing segment business increased by 12% this quarter year-over-year and by 6% sequentially, quarter-over-quarter. We are also pleased with the growth in profitability for the quarter and for the nine month period and believe this represents our strategy for continued profitable growth as we align our resources and strengthen our business. We believe that, even as consumer confidence dampens, overall consumer spending will continue to shift to the Internet where consumers already experience added convenience and favorable pricing. In the brick and mortar world, the ongoing migration from paper based payment transactions to electronic transactions is expected to continue and both of these trends represent positive news for our channel partners, end-customers and the markets we service," said Patrick H. Gaines, Chairman and Chief Executive Officer.
Conference Call
Management will host a conference call Monday, February 9, 2009 at 1:30pm Pacific Time (4:30 pm 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 800-920-2983. International callers please dial 212-231-2905.
If you are unable to join the call, a telephone replay will be available through February 18, 2009 by dialing 800-558-5253 from within the U.S. or Canada, or 416-626-4100 if calling internationally. Please reference reservation number 21414403 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 third quarter and nine 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 Nine Months Ended
December 31 December 31
-------------------------- --------------------------
2008 2007 2008 2007
-------------------------- --------------------------
REVENUE $3,037,241 $3,397,810 $9,301,687 $8,036,074
COST OF
REVENUE
(includes
stock-based
compensation
("s.b.c.")
expense of
$37,464 for
three months
ended December
31, 2008
(three months
ended December
31, 2007 -
$11,158) and
$113,066 for
nine months
ended December
31, 2008
(nine months
ended December
31, 2007 -
$30,654)) 1,560,421 1,517,211 4,578,445 3,327,587
-------------------------- --------------------------
GROSS PROFIT
(excludes
amortization
and deprecia-
tion expense) 1,476,820 1,880,599 4,723,242 4,708,487
OPERATING
EXPENSES
General and
administrative
(includes
s.b.c.
expense of
$274,296 for
three months
ended
December 31,
2008 (three
months ended
December 31,
2007 - $217,507)
and $871,254
for nine
months ended
December 31,
2008 (nine
months ended
December 31,
2007-
$451,526)) 962,910 1,419,302 3,211,025 3,736,187
Sales and
marketing
(includes
s.b.c. expense
of $765 for
three months
ended December
31, 2008
(three months
ended December
31, 2007 -
$1,463) and
$2,286 for nine
months ended
December 31,
2008 (nine
months ended
December 31,
2007 - $1,463)) 77,149 44,847 237,715 161,539
Product
development and
enhancement
(includes
s.b.c. expense
of $12,233 for
three months
ended December
31, 2008 (three
months ended
December 31,
2007 - $11,701)
and $36,567 for
nine months
ended December
31, 2008 (nine
months ended
December 31,
2007 -
$11,701)) 58,279 61,459 197,589 114,093
Amortization and
depreciation 197,102 382,617 589,654 643,870
-------------------------- --------------------------
INCOME BEFORE
OTHER INCOME
(EXPENSES) AND
INCOME TAXES 181,380 (27,626) 487,259 52,798
Foreign
exchange
gain (loss) 281,682 562 380,650 (426,535)
Other income 10,833 9,084 29,808 28,626
Gain on sale
of assets -- -- 864 1,700
Interest
income 58,750 110,691 202,719 347,794
Interest
expense (45,269) (116,788) (204,154) (246,955)
-------------------------- --------------------------
INCOME (LOSS)
BEFORE INCOME
TAXES 487,376 (24,077) 897,146 (242,572)
Income taxes 206,074 203,972 597,018 414,865
-------------------------- --------------------------
NET INCOME
(LOSS) 281,302 (228,049) 300,128 (657,437)
DEFICIT,
beginning of
period (34,187,796) (32,415,182) (34,206,622) (31,985,794)
-------------------------- --------------------------
DEFICIT, end
of period $(33,906,494) $(32,643,231) $(33,906,494) $(32,643,231)
-------------------------- --------------------------
EARNINGS (LOSS)
PER SHARE,
basic and
diluted $0.01 $(0.01) $0.01 $(0.03)
-------------------------- --------------------------
WEIGHTED
AVERAGE SHARES
OUTSTANDING
Basic 27,116,408 22,341,280 26,741,795 21,814,759
Diluted 27,116,408 22,341,280 26,741,795 21,814,759
LML PAYMENT SYSTEMS INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In U.S. Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
December 31 December 31
------------------- ---------------------
2008 2007 2008 2007
------------------- ---------------------
GAAP Net Income (Loss) $281,302 $(228,049) $ 300,128 $(657,437)
Add stock-based
compensation 324,759 241,829 1,023,173 495,344
Add stock-based
compensation - future
income taxes -- -- -- 11,185
Add amortization and
depreciation 197,102 382,617 589,654 643,871
Add unrealized foreign
exchange (gain) loss (302,231) 17,242 (298,891) 355,118
Less gain on sale of
capital assets -- -- (864) (1,700)
------------------- ---------------------
Non-GAAP Net Income $500,932 $ 413,639 $1,613,200 $ 846,381
------------------- ---------------------
GAAP Net Earnings (Loss)
Per Share, basic $ 0.01 $ (0.01) $ 0.01 $ (0.03)
Add stock-based
compensation 0.01 0.01 0.04 0.02
Add stock-based
compensation - future
income taxes -- -- -- 0.00
Add amortization and
depreciation 0.01 0.02 0.02 0.03
Add unrealized foreign
exchange (gain) loss (0.01) 0.00 (0.01) 0.02
Less gain on sale of
capital assets -- -- (0.00) (0.00)
------------------- ---------------------
Non-GAAP Net Earnings Per
Share, basic $ 0.02 $ 0.02 $ 0.06 $ 0.04
------------------- ---------------------
GAAP Net Earnings (Loss)
Per Share, diluted $ 0.01 $ (0.01) $ 0.01 $ (0.03)
Add stock-based
compensation 0.01 0.01 0.04 0.02
Add stock-based
compensation - future
income taxes -- -- -- 0.00
Add amortization and
depreciation 0.01 0.02 0.02 0.03
Add unrealized foreign
exchange (gain) loss (0.01) 0.00 (0.01) 0.02
Less gain on sale of
capital assets -- -- (0.00) (0.00)
------------------- ---------------------
Non-GAAP Net Earnings Per
Share, diluted $ 0.02 $ 0.02 $ 0.06 $ 0.04
------------------- ---------------------
LML PAYMENT SYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars, except as noted below)
(Unaudited)
December 31, March 31,
2008 2008
----------- -----------
ASSETS
Current Assets
Cash and cash equivalents $ 6,034,854 $ 9,749,768
Funds held for merchants 2,536,110 5,833,617
Restricted cash 125,000 250,000
Accounts receivable, less allowances of
$32,168 and $32,168, respectively 554,919 719,301
Prepaid expenses 299,163 273,751
----------- -----------
Total current assets 9,550,046 16,826,437
Property and equipment, net 241,713 246,828
Patents, net 664,586 788,473
Restricted cash 129,488 153,619
Other assets 21,954 23,247
Goodwill 17,874,202 15,903,077
Intangible assets, net 5,329,275 5,700,637
----------- -----------
TOTAL ASSETS $33,811,264 $39,642,318
----------- -----------
LIABILITIES
Current Liabilities
Accounts payable $ 622,319 $ 1,745,679
Accrued liabilities 798,088 648,661
Corporate taxes payable 21,180 573,240
Funds due to merchants 2,536,110 5,833,617
Current portion of obligations under
capital lease 201,357 203,366
Current portion of promissory notes 2,134,647 2,731,923
Current portion of deferred revenue 1,287,897 1,448,921
----------- -----------
Total current liabilities 7,601,598 13,185,407
Obligations under capital lease 17,379 177,573
Promissory notes -- 2,435,460
Deferred revenue 3,649,567 4,606,379
----------- -----------
TOTAL LIABILITIES 11,268,544 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 (4,714) (19,046)
Contributed surplus 6,414,360 5,391,187
Deficit (33,906,494) (34,206,622)
----------- -----------
Total shareholders' equity 22,542,720 19,237,499
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $33,811,264 $39,642,318
----------- -----------
LML PAYMENT SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
December 31 December 31
----------------------- ------------------------
2008 2007 2008 2007
----------------------- ------------------------
Operating
Activities:
Net income
(loss) $ 281,302 $ (228,049) $ 300,128 $ (657,437)
Adjustments to
reconcile net
income (loss)
to net cash
provided by
(used in)
operating
activities
Amortization
and depre-
ciation 197,102 382,617 589,654 643,870
Gain on sale
of assets -- -- (864) (1,700)
Stock-based
compensation 324,759 241,829 1,023,173 495,344
Stock-based
compensation -
future income
taxes -- -- -- 11,185
Unrealized
foreign
exchange
(gain) loss (302,231) 17,242 (298,891) 355,118
Changes in non-cash
operating working
capital
Restricted cash -- -- 125,000 --
Accounts
receivable 1,217 175,270 136,826 (15,645)
Prepaid expenses (21,094) 14,862 (31,127) 131,494
Other assets -- (263) -- (8,753)
Accounts payable
and accrued
liabilities 31,649 (264,932) (801,937) (625,169)
Corporate taxes
payable 55,872 327,881 (517,121) 454,799
Deferred revenue (348,875) (414,804) (1,108,374) (1,044,079)
----------------------- ------------------------
Net cash provided
by (used in)
operating
activities 219,701 251,653 (583,533) (260,973)
----------------------- ------------------------
Investing
Activities:
Acquisition
of Beanstream,
net of cash
acquired -- (3,403,680) -- (7,375,068)
Acquisition of
property and
equipment (16,744) (6,723) (106,147) (113,646)
Proceeds from
disposal of
equipment -- -- 5,500 1,700
Development of
patents -- (2,066) (1,652) (10,004)
----------------------- ------------------------
Net cash used in
investing
activities (16,744) (3,412,469) (102,299) (7,497,018)
----------------------- ------------------------
Financing
Activities:
Payments on
capital leases (48,939) (91,509) (142,335) (268,583)
Payment on
promissory notes -- -- (2,843,974) --
Share capital
financing costs -- -- (3,537) --
Proceeds from
exercise of
stock options -- -- -- 77,438
----------------------- ------------------------
Net cash used in
financing
activities (48,939) (91,509) (2,989,846) (191,145)
----------------------- ------------------------
Effects of foreign
exchange rate
changes on cash
and cash
equivalents (54,565) (59,272) (39,236) 244,514
INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS 99,453 (3,311,597) (3,714,914) (7,704,622)
Cash and cash
equivalents,
beginning of
period 5,935,401 5,769,983 9,749,768 10,163,008
----------------------- ------------------------
Cash and cash
equivalents,
end of period $6,034,854 $ 2,458,386 $ 6,034,854 $ 2,458,386
----------------------- ------------------------
Supplemental
disclosure of
cash flow
information
Interest paid $ 482 $ 4,292 $ 407,756 $ 43,041
Taxes paid $ 201,476 $ 14,063 $ 1,173,893 $ 42,449
Non-cash
investing and
financing
transactions not
included in cash
flows:
Issuance of common
shares pursuant
to earn-out
provision $ -- $ -- $ 1,971,125 $ --