VANCOUVER, British Columbia, Nov. 9, 2012 (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, 2012.
Revenue for the second quarter ended September 30, 2012 was $5.8 million compared to $13 million in revenue for the second quarter ended September 30, 2011. Gross profit for the quarter was $2.5 million or 43% compared to $7.3 million or 57% last year. Net income for the quarter was $349,000, or $0.01 per share, compared to net income of $3.4 million or $0.12 per share, for the second quarter ended September 30, 2011.
Revenue for the six month period ended September 30, 2012 was $11.4 million compared to revenue of $18.9 million for the six months ended September 30, 2011. Gross profit for the six months ended September 30, 2012 was $4.8 million compared to gross profit of $10 million for the six months ended September 30, 2011. Net income for the same period was $796,000, or $0.03 per share, compared to net income of $4.1 million or $0.15 per share (basic), for the same period during fiscal 2012.
Highlights
- Transaction Payment Processing segment revenue increases 31% year over year for the second quarter
- Added over 770 customers during the quarter, increasing total customer base to over 15,000
- Subsidiary Beanstream named a Sage North America Endorsed/OEM development partner of the year for 2012
Pending Arrangement
As previously announced, on September 21, 2012, LML entered into an Arrangement Agreement (the "Arrangement Agreement") with Digital River, Inc. ("Digital River") and LML Acquisition Corp., a direct wholly-owned subsidiary of Digital River ("Merger Sub"). The Arrangement Agreement contemplates the acquisition by Digital River, through Merger Sub, of all of the outstanding equity securities of LML pursuant to a "plan of arrangement" (the "Arrangement") under the Business Corporations Act (British Columbia), under which LML is now governed. LML's Board of Directors, acting upon the unanimous recommendation of a special committee of the Board of Directors comprised of all the independent members of the Board of Directors, has approved and adopted the Arrangement Agreement and has recommended that LML's shareholders vote to approve the Arrangement Agreement. The Arrangement Agreement has also been approved by the boards of directors of all other parties to the Arrangement Agreement.
Additional Information and Where to Find It
LML has filed a preliminary proxy statement with the SEC indicating its intention to call a special meeting of its shareholders to vote on the Arrangement and the Arrangement Agreement. Completion of the Arrangement is subject to the approval of the shareholders of LML, regulatory approvals, and other customary conditions. LML's shareholder meeting to vote on the Arrangement Agreement and the closing of the Arrangement are expected to occur during the latter half of the fourth quarter of 2012 or the first quarter of 2013; however, no assurance can be given that the Arrangement Agreement will be approved by LML's shareholders or that the Arrangement will ultimately be completed. SHAREHOLDERS OF LML ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION CONCERNING THE ARRANGEMENT AND LML. Shareholders of LML will be able to obtain a free copy of the definitive proxy statement, as well as other filings containing information about LML and the Arrangement, when available, without charge, at the SEC's Internet site (www.sec.gov). In addition, copies of the definitive proxy statement and other filings containing information about LML and the Arrangement can be obtained, when available and without charge, by directing a request to LML, Attention: Investor Relations, 1140 West Pender Street, Suite 1680, Vancouver, British Columbia V6E 4G1, by phone at (800) 888-2260, or on LML's website at www.lmlpayment.com.
LML, Digital River and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from LML's shareholders in respect of the Arrangement. You can find information about LML's directors and executive officers in LML's definitive annual proxy statement filed with the SEC on July 31, 2012. You can obtain free copies of LML's annual proxy statement, and LML's definitive proxy statement in connection with the Arrangement (when it becomes available), by contacting LML's investor relations department. Additional information regarding the interests of LML's directors and executive officers will be included in the definitive proxy statement and the other relevant documents filed with the SEC when they become available. You can find information about Digital River's directors and executive officers in Digital River's definitive annual proxy statement filed with the SEC on April 18, 2012. You can obtain free copies of Digital River's annual proxy statement by contacting Digital River's investor relations department.
About LML Payment Systems Inc.
LML Payment Systems Inc., through its Canadian subsidiary Beanstream Internet Commerce Inc., and its U.S. subsidiaries Beanstream Internet Commerce Corp. and LML Payment Systems Corp., 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. For more details about LML Payment Systems, visit www.lmlpayment.com.
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. | ||||
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CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (In U.S. Dollars) (Unaudited) |
||||
| Three Months Ended | Six Months Ended | |||
| September 30 | September 30 | |||
| 2012 | 2011 | 2012 | 2011 | |
| REVENUE | $5,759,228 | $12,921,122 | $11,372,260 | $18,890,387 |
| COST OF REVENUE | 3,280,872 | 5,610,876 | 6,531,844 | 8,932,702 |
| GROSS PROFIT | 2,478,356 | 7,310,246 | 4,840,416 | 9,957,685 |
| OPERATING EXPENSES | ||||
| General and administrative | 1,330,308 | 981,091 | 2,296,495 | 1,912,095 |
| Sales and marketing | 273,928 | 214,727 | 525,152 | 522,237 |
| Product development and enhancement | 307,769 | 248,516 | 617,743 | 522,211 |
| INCOME BEFORE OTHER INCOME (LOSS) AND INCOME TAXES | 566,351 | 5,865,912 | 1,401,026 | 7,001,142 |
| OTHER INCOME (LOSS) | ||||
| Foreign exchange (loss) gain | (68,794) | (34,394) | (73,000) | (2,744) |
| Interest income | 43,744 | 11,708 | 70,501 | 28,885 |
| (25,050) | (19,686) | (2,499) | 26,141 | |
| INCOME BEFORE INCOME TAXES | 541,301 | 5,843,226 | 1,398,527 | 7,027,283 |
| Income tax expense (recovery) | ||||
| Current | 319,610 | 2,222,008 | 775,229 | 2,428,205 |
| Deferred | (127,148) | 207,485 | (172,870) | 497,999 |
| 192,462 | 2,429,493 | 602,359 | 2,926,204 | |
| NET INCOME | 348,839 | 3,413,733 | 796,168 | 4,101,079 |
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||
| Unrealized foreign exchange gain (loss) on translation of foreign operations |
231,359 |
(398,154) |
100,200 |
(383,791) |
| TOTAL COMPREHENSIVE INCOME | $580,198 | $3,015,579 | $896,368 | $3,717,288 |
| EARNINGS PER SHARE, basic | $0.01 | $0.12 | $0.03 | $0.15 |
| EARNINGS PER SHARE, diluted | $0.01 | $0.12 | $0.03 | $0.14 |
| WEIGHTED AVERAGE SHARES OUTSTANDING | ||||
| Basic | 28,246,684 | 28,233,434 | 28,246,684 | 28,191,808 |
| Diluted | 29,107,280 | 28,898,811 | 28,858,501 | 28,932,332 |
| LML PAYMENT SYSTEMS INC. | ||
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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (In U.S. Dollars, except as noted below) (Unaudited) |
||
| September 30, | March 31, | |
| 2012 | 2012 | |
| ASSETS | ||
| Current Assets | ||
| Cash and cash equivalents | $27,402,745 | $26,783,754 |
| Funds held for merchants | 12,391,538 | 9,485,182 |
| Short-term investments | 2,586,393 | 3,290,393 |
| Restricted cash | 175,000 | 175,000 |
| Accounts receivable, less allowance of $190,513 (March 31, 2012 -- $27,397) | 1,530,081 | 1,272,580 |
| Other receivable | 852,889 | -- |
| Inventory | 38,049 | -- |
| Corporate taxes receivable | 358,724 | 373,939 |
| Prepaid expenses | 244,473 | 331,361 |
| Total current assets | 45,579,892 | 41,712,209 |
| Property and equipment, net | 197,521 | 121,496 |
| Patents | 31,093 | 120,457 |
| Restricted cash | 260,395 | 258,095 |
| Deferred tax assets | 982,821 | 809,951 |
| Goodwill | 17,874,202 | 17,874,202 |
| Other intangible assets | 3,472,462 | 3,720,037 |
| Other assets | 20,919 | 20,796 |
| Total assets | $68,419,305 | $64,637,243 |
| LIABILITIES | ||
| Current Liabilities | ||
| Accounts payable | $809,973 | $720,666 |
| Accrued liabilities | 1,860,478 | 1,445,490 |
| Corporate taxes payable | -- | 386,607 |
| Funds due to merchants | 12,391,538 | 9,485,182 |
| Current portion of obligations under finance lease | 2,460 | 2,460 |
| Current portion of deferred revenue | 811,048 | 1,342,828 |
| Total current liabilities | 15,875,497 | 13,383,233 |
| Obligations under finance lease | 3,510 | 4,920 |
| Total liabilities | 15,879,007 | 13,388,153 |
| 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, 28,246,684 issued and outstanding (March 31, 2012 - 28,246,684) | 53,918,912 | 53,918,912 |
| Contributed surplus | 10,396,434 | 10,001,594 |
| Warrants | 113,662 | 113,662 |
| Deficit | (12,261,392) | (13,057,560) |
| Accumulated other comprehensive income | 372,682 | 272,482 |
| Total equity | 52,540,298 | 51,249,090 |
| Total liabilities and equity | $68,419,305 | $64,637,243 |
| LML PAYMENT SYSTEMS INC. | ||||
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CONSOLIDATED STATEMENTS OF CASH FLOWS (In U.S. Dollars) (Unaudited) |
||||
| Three Months Ended | Six Months Ended | |||
| September 30 | September 30 | |||
| 2012 | 2011 | 2012 | 2011 | |
| Operating Activities: | ||||
| Net income | $348,839 | 3,413,733 | $796,168 | 4,101,079 |
| Adjustments to reconcile net income to net cash (used in) provided by operating activities | ||||
| Amortization of property and equipment | 23,375 | 25,038 | 45,575 | 59,278 |
| Amortization of intangible assets | 168,469 | 165,645 | 336,938 | 331,290 |
| Share-based payments | 195,733 | 152,657 | 394,840 | 289,094 |
| Deferred income taxes | (127,148) | 207,485 | (172,870) | 497,999 |
| Foreign exchange (gain) loss | (124,223) | 195,701 | (70,242) | 191,998 |
| Changes in non-cash operating working capital | ||||
| Accounts receivable | (54,346) | 838,251 | (234,589) | (36,299) |
| Other receivable | (852,889) | -- | (852,889) | -- |
| Inventory | 1,188 | -- | (37,317) | -- |
| Corporate taxes receivable | (90,723) | (106,308) | 6,375 | (165,477) |
| Prepaid expenses | 31,314 | 10,818 | 88,030 | 32,325 |
| Accounts payable and accrued liabilities | 547,298 | (309,966) | 494,922 | (447,990) |
| Corporate taxes payable | (836,236) | 1,631,891 | (376,158) | (2,706,864) |
| Deferred revenue | (298,362) | (339,475) | (539,387) | (648,681) |
| Net cash (used in) provided by operating activities | (1,067,711) | 5,885,470 | (120,604) | 1,497,752 |
| Investing Activities: | ||||
| Acquisition of short term investments | -- | (3,294,525) | -- | (3,294,525) |
| Maturity of short term investments | 766,125 | -- | 766,125 | -- |
| Acquisition of property and equipment | (93,238) | (21,655) | (119,769) | (42,897) |
| Net cash provided by (used in) investing activities | 672,887 | (3,316,180) | 646,356 | (3,337,422) |
| Financing Activities: | ||||
| Proceeds from exercise of stock options | -- | -- | -- | 205,375 |
| Net cash provided by financing activities | -- | -- | -- | 205,375 |
| Effects of foreign exchange rate changes on cash and cash equivalents |
237,008 |
(375,299) |
93,239 | (362,912) |
| (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(157,816) |
2,193,991 |
618,991 | (1,997,207) |
| Cash and cash equivalents, beginning of period | 27,560,561 | 22,726,293 | 26,783,754 | 26,917,491 |
| Cash and cash equivalents, end of period | $27,402,745 | $24,920,284 | $27,402,745 | $24,920,284 |
| Supplemental disclosure of cash flow information | ||||
| Taxes paid | $1,260,548 | $697,000 | $1,260,548 | $5,296,921 |