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 $ --