VANCOUVER, British Columbia, Nov. 12, 2009 (GLOBE NEWSWIRE) -- LML Payment Systems Inc. ("LML") (Nasdaq:LMLP), a leading payments technology provider of financial payment processing solutions for e-commerce and traditional businesses, reports results for its second quarter and six month period ended September 30, 2009.
Revenue for the second quarter ended September 30, 2009 was $3,252,000, an increase of 5% over the $3,087,000 in revenue for the second quarter ended September 30, 2008. GAAP net income for the quarter was $366,000, or $0.01 per share, compared to GAAP net income of $65,000, or $0.00 per share, for the second quarter ended September 30, 2008, an improvement of $301,000. Cash used in operating activities was ($13,000) compared to cash used in operating activities of ($578,000) last year.
Non-GAAP net income was $651,000, or $0.02 per share, compared to $502,000, 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-cash items. A reconciliation of GAAP to non-GAAP financial measures is attached.
Revenue for the six month period ended September 30, 2009 was $6,487,000, an increase of 4% from revenue of $6,264,000 for the six month period ended September 30, 2008. GAAP net income for the same period was $455,000, or $0.02 per share, compared to GAAP net income of $19,000 or $0.00 per share, for the same period during fiscal 2009, an improvement of $436,000. Cash provided by operating activities was $100,000 compared to cash used in operating activities of ($803,000) last year.
Non-GAAP net income for the six month period ended September 30, 2009 was $1,207,000, or $0.04 per share, compared to $1,112,000, or $0.04 per share, for the same period last year.
"We are pleased with our progress and results. Our Transaction Payment Processing segment continues to lead our growth and now represents 67% of our revenue. For the quarter, overall revenue for this segment increased 18.5% in Canadian dollars, or 12.5% in U.S. dollars. These profitable results allowed us to continue to make investments in the growth of the business and this past quarter, we increased spending in product development and sales and marketing by 96% and 20% respectively. As anticipated, we did see a decline in check processing revenue but still produced profitable results from the segment. We believe we will continue to see growth in electronic forms of payment, particularly payments that leverage the Internet, and the continued decline of paper-based forms of payment and, during the quarter, we continued to adjust accordingly. Revenue from our intellectual property segment increased approximately 4% for the quarter and 6.3% for the first six months compared to the same periods last year. We continue to believe in the validity and enforceability of our intellectual property as we continue to move forward with licensing and enforcement action," said Patrick H. Gaines, Chief Executive Officer.
Q2 Highlights
* Overall revenue increases 5% * Transaction Payment Processing segment revenue increases 18.5% in Canadian dollars, or 12.5% in U.S. dollars * Net income of $366,000 compared to $65,000 last year, an improvement of $301,000 * Cash used in operating activities of ($13,000) compared to ($578,000) last year, an improvement of $565,000
6 Months Highlights
* Overall revenue increases 4% * Transaction Payment Processing segment revenue increases 23.2% in Canadian dollars, or 11.7% in U.S. dollars * Net income of $483,000 compared to $19,000 last year, an improvement of $464,000 * Cash provided by operating activities of $100,000 compared to cash used in operating activities of ($803,000) last year, an improvement of $903,000
Conference Call
Management will host a conference call on November 12, 2009 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 800-786-5706. International callers please dial 212-231-2901.
If you are unable to join the call, a telephone replay will be available through November 24, 2009 by dialing 800-633-8284 from within the U.S. or Canada, or 402-977-9140 if calling internationally. Please reference reservation number 21443078 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 the FASB authoritative guidance regarding share-based payment, depreciation and amortization expense, and certain non-cash 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. The Corporation believes the non-GAAP financial measures provide investors with similar measurement tools as its management uses to evaluate performance. Specifically, the Corporation's management utilizes and relies upon certain financial reports which consist of an operating performance indicator without certain non-cash items such as amortization and depreciation and stock-based compensation to evaluate the Corporation's operational performance as it pertains to generating cash, measuring budget expectations and achieving performance milestones. 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)
(Unaudited)
Three Months Ended Six Months Ended
September 30 September 30
--------------------------- ---------------------------
2009 2008 2009 2008
------------- ------------- ------------- -------------
REVENUE $ 3,251,645 $ 3,086,974 $ 6,487,204 $ 6,264,446
COST OF
REVENUE
(includes
stock-based
compensation
("s.b.c.")
expense of
$37,464 for
three months
ended
September
30, 2009
(three
months ended
September
30, 2008 -
$37,788) and
$74,114 for
six months
ended
September
30, 2009
(six months
ended
September
30, 2008 -
$75,601))
1,715,499 1,504,746 3,339,925 3,018,024
------------- ------------- ------------- -------------
GROSS PROFIT
(excludes
amortization
and
depreciation
expense) 1,536,146 1,582,228 3,147,279 3,246,422
OPERATING
EXPENSES
General and
admini-
strative
(includes
s.b.c
expense of
$268,535
for three
months
ended
September
30, 2009
(three
months
ended
September
30, 2008 -
$289,642)
and
$538,359
for six
months
ended
September
30, 2009
(six
months
ended
September
30, 2008 -
$596,959))
1,076,785 1,183,351 2,025,297 2,248,115
Sales and
marketing
(includes
s.b.c
expense of
$765 for
three
months
ended
September
30, 2009
(three
months
ended
September
30, 2008 -
$765) and
$1,513 for
six months
ended
September
30, 2009
(six
months
ended
September
30, 2008 -
$1,521))
93,223 78,084 192,605 160,566
Product
develop-
ment and
enhance-
ment
(includes
s.b.c
expense
of $12,233
for three
months
ended
September
30, 2009
(three
months
ended
September
30, 2008 -
$12,233)
and
$24,200
for six
months
ended
September
30, 2009
(six
months
ended
September
30, 2008 -
$24,333))
120,431 67,219 219,826 139,310
Amortization
and
depreciation 198,337 198,195 396,584 392,552
(Gain) on
sale of
assets (1,656) -- (3,830) (864)
------------- ------------- ------------- -------------
INCOME BEFORE
OTHER INCOME
(EXPENSES)
AND INCOME
TAXES 49,026 55,379 316,797 306,743
Foreign
exchange
gain 96,171 163,805 124,363 98,968
Other
income
(expenses) (50,641) 10,654 (50,641) 18,975
Interest
income 4,797 81,532 16,264 143,969
Interest
expense (1,549) (53,505) (46,830) (158,885)
------------- ------------- ------------- -------------
INCOME BEFORE
OTHER INCOME
(EXPENSES)
AND INCOME
TAXES 97,804 257,865 359,953 409,770
Income tax
expense
(recovery)
Current (171,889) 192,520 628 390,944
Future (96,154) -- (96,154) --
------------- ------------- ------------- -------------
(268,043) 192,520 (95,526) 390,944
NET INCOME 365,847 65,345 455,479 18,826
DEFICIT,
beginning of
period (28,661,824) (34,253,141) (28,751,456) (34,206,622)
------------- ------------- ------------- -------------
DEFICIT, end
of period $(28,295,977) $(34,187,796) $(28,295,977) $(34,187,796)
------------- ------------- ------------- -------------
EARNINGS
PER SHARE,
basic and
diluted $ 0.01 $ 0.00 $ 0.02 $ 0.00
------------- ------------- ------------- -------------
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
----------------------- -----------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
GAAP Net Income $ 365,847 $ 65,345 $ 455,479 $ 18,826
Add stock-based
compensation 318,997 340,428 638,186 698,414
Add amortization and
depreciation 198,337 198,195 396,584 392,552
Less foreign exchange
(gain) loss (230,612) (101,825) (279,463) 3,340
Less (gain) on sale
of capital assets (1,656) -- (3,830) (864)
----------- ----------- ----------- -----------
Non-GAAP Net Income $ 650,913 $ 502,143 $1,206,956 $1,112,268
=========== =========== =========== ===========
GAAP Net Earnings Per
Share, basic $ 0.01 $ 0.00 $ 0.02 $ 0.00
Add stock-based
compensation 0.01 0.01 0.02 0.03
Add amortization and
depreciation 0.01 0.01 0.01 0.01
Less foreign exchange
(gain) loss (0.01) (0.00) (0.01) 0.00
Less (gain) on sale
of capital assets (0.00) -- (0.00) (0.00)
----------- ----------- ----------- -----------
Non-GAAP Net Earnings
Per Share $ 0.02 $ 0.02 $ 0.04 $ 0.04
=========== =========== =========== ===========
GAAP diluted Net
Earnings Per Share $ 0.01 $ 0.00 $ 0.02 $ 0.00
Add stock-based
compensation 0.01 0.01 0.02 0.03
Add amortization and
depreciation 0.01 0.01 0.01 0.01
Less foreign exchange
(gain) loss (0.01) (0.00) (0.01) 0.00
Less (gain) on sale
of capital assets (0.00) -- (0.00) (0.00)
----------- ----------- ----------- -----------
Non-GAAP diluted Net
Earnings Per Share $ 0.02 $ 0.02 $ 0.04 $ 0.04
=========== =========== =========== ===========
LML PAYMENT SYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars, except as noted below)
(Unaudited)
September 30, 2009 March 31, 2009
------------------ ------------------
ASSETS
Current Assets
Cash and cash equivalents $ 4,003,334 $ 6,138,530
Funds held for merchants 11,387,370 10,746,731
Restricted cash 175,000 175,000
Accounts receivable, less
allowances of $29,949 and
$31,785, respectively 648,751 801,087
Corporate taxes receivable 150,716 --
Prepaid expenses 451,363 295,702
Current portion of future
income tax assets 1,439,435 838,575
------------------ ------------------
Total current assets 18,255,969 18,995,625
Property and equipment, net 192,556 227,324
Patents, net 539,017 622,730
Restricted cash 147,287 125,030
Future income tax assets 4,382,010 4,429,578
Other assets 20,215 19,020
Goodwill 17,874,202 17,874,202
Other intangible assets, net 4,957,912 5,205,487
------------------ ------------------
TOTAL ASSETS $ 46,369,168 $ 47,498,996
================== ==================
LIABILITIES
Current Liabilities
Accounts payable $ 735,706 $ 756,845
Accrued liabilities 820,393 814,094
Corporate taxes payable -- 283,794
Funds due to merchants 11,387,370 10,746,731
Obligations under capital
lease 68,955 170,243
Promissory notes -- 2,100,920
Current portion of deferred
revenue 1,449,487 1,361,046
------------------ ------------------
Total current liabilities 14,461,911 16,233,673
Deferred revenue 2,712,056 3,330,630
------------------ ------------------
TOTAL LIABILITIES 17,173,967 19,564,303
------------------ ------------------
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, 27,116,408 and
27,116,408 issued and
outstanding, respectively 50,039,568 50,039,568
Contributed surplus 7,370,245 6,732,059
Deficit (28,295,977) (28,751,456)
Accumulated other
comprehensive income (loss) 81,365 (85,478)
------------------ ------------------
Total shareholders' equity 29,195,201 27,934,693
------------------ ------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 46,369,168 $ 47,498,996
================== ==================
LML PAYMENT SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars)
(Unaudited)
Three Months Ended Six Months Ended
September 30 September 30
----------------------- ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Operating
Activities:
Net income $ 365,847 $ 65,345 $ 455,479 $ 18,826
Adjustments to
reconcile net
income to net
cash (used in)
provided by
operating
activities
Provision for
losses on
accounts
receivable 5,705 -- 5,705 --
Amortization
and
depreciation 198,337 198,195 396,584 392,552
Gain on sale of
assets (1,656) -- (3,830) (864)
Stock-based
compensation 318,997 340,428 638,186 698,414
Future income
taxes (96,154) -- (96,154) --
Foreign
exchange
(gain) loss (230,612) (101,825) (279,463) 3,340
Changes in non-cash
operating working
capital
Restricted cash -- -- -- 125,000
Accounts
receivable 292,525 53,049 217,150 135,609
Corporate taxes
receivable (150,716) -- (150,716) --
Prepaid expenses (111,613) (34,548) (149,026) (10,033)
Accounts payable
and accrued
liabilities 70,271 (94,659) (66,446) (833,586)
Corporate taxes
payable (403,066) (630,432) (320,682) (572,993)
Deferred revenue (270,415) (373,937) (546,402) (759,499)
----------- ----------- ----------- -----------
Net cash (used in)
provided by
operating
activities (12,550) (578,384) 100,385 (803,234)
----------- ----------- ----------- -----------
Investing
Activities:
Acquisition of
property and
equipment (1,912) (36,057) (14,520) (89,403)
Proceeds from
disposal of
property and
equipment 1,656 -- 3,830 5,500
Development of
patents -- (46) -- (1,652)
----------- ----------- ----------- -----------
Net cash used in
investing
activities (256) (36,103) (10,690) (85,555)
----------- ----------- ----------- -----------
Financing
Activities:
Payments on
capital leases (50,743) (49,124) (101,330) (93,396)
Payment on
promissory notes -- -- (2,321,460) (2,843,974)
Share capital
financing costs -- -- -- (3,537)
----------- ----------- ----------- -----------
Net cash used in
financing
activities (50,743) (49,124) (2,422,790) (2,940,907)
----------- ----------- ----------- -----------
Effects of foreign
exchange rate
changes on cash
and cash
equivalents 86,778 (18,660) 197,899 15,329
INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS 23,229 (682,271) (2,135,196) (3,814,367)
Cash and cash
equivalents,
beginning of
period 3,980,105 6,617,672 6,138,530 9,749,768
----------- ----------- ----------- -----------
Cash and cash
equivalents,
end of period $4,003,334 $5,935,401 $4,003,334 $5,935,401
----------- ----------- ----------- -----------
Supplemental
disclosure of cash
flow information
Interest paid $ 1,680 $ 5,399 $ 47,093 $ 406,590
Taxes paid $ 369,287 $ 827,155 $ 435,138 $ 972,419
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