SOURCE: LML Payment Systems Inc.

February 08, 2007 09:25 ET

LML Reports Results for the Third Quarter of Fiscal 2007

Increased Revenue of 25%

VANCOUVER, BC -- (MARKET WIRE) -- February 8, 2007 -- LML PAYMENT SYSTEMS INC. (the "Corporation") (NASDAQ: LMLP) reports results for its third quarter ended December 31, 2006.

Total revenue was approximately $1.5 million for the third quarter ended December 31, 2006, compared to approximately $1.2 million for the third quarter ended December 31, 2005, an increase of approximately 25%.

Costs of operations were approximately $1.2 million for the third quarter ended December 31, 2006 and 2005, respectively. Sales, general and administrative expenses for the third quarter were approximately $726,000, compared to approximately $1.1 million for the third quarter ended December 31, 2005, a decrease of approximately 34%.

There was a net loss of approximately ($924,000) or approximately ($0.05) per share for the quarter compared to a net loss of approximately ($1.1 million) or approximately ($0.06) per share for the quarter ended December 31, 2005. Included in the net loss for the quarter were other expenses of approximately $540,000 related to our due diligence efforts with respect to exploring potential acquisitions and merger opportunities as well as non-cash expenses, being stock-based compensation expense and amortization and depreciation expense, of approximately $262,000 and $72,000 respectively.

For the nine months ended December 31, 2006, total revenue was approximately $5.0 million, compared to approximately $3.9 million for the nine months ended December 31, 2005, an increase of approximately 28.2%.

Costs of operations for the nine months ended December 31, 2006 were approximately $3.7 million compared to approximately $3.4 million for the nine months ended December 31, 2005, an increase of approximately 8.8%. Sales, general and administrative expenses were approximately $2.3 million for the nine months ended December 31, 2006 compared to approximately $4.0 million for the nine months ended December 31, 2005, a decrease of approximately 42.5%.

There was a net loss of approximately ($1.2 million) or approximately ($0.06) per share for the nine months ended December 31, 2006 compared to a net loss of approximately ($4.1 million) or approximately ($0.21) per share for the nine months ended December 31, 2005. Included in the net loss for the nine months ended December 31, 2006 were other expenses of approximately $540,000 related to our due diligence efforts with respect to exploring potential acquisitions and merger opportunities as well as non-cash expenses, being stock-based compensation expense and amortization and depreciation expense, of approximately $688,000 and $231,000 respectively.

We had approximately $8.9 million in working capital as of December 31, 2006 compared to approximately $3.0 million as of March 31, 2006. Our cash used in operating activities was approximately $242,000 for the quarter versus approximately $572,000 for the quarter ended December 31, 2005, a decrease in cash used in operating activities of approximately $330,000. Our cash provided by operating activities was approximately $7.4 million for the nine months ended December 31, 2006 versus cash used In operating activities of approximately $1.7 million for the nine months ended December 31, 2005, an increase in cash provided by operating activities of approximately $9.1 million.

Conference Call

Management will host a conference call today at 2:00pm Pacific Time (5:00pm 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 888-850-5066. International callers please dial 206-315-8587. Please enter Participant Conference Entry Code 96540 (followed by the # key) when prompted.

If you are unable to join the call, a telephone replay will be available through February 22, 2007 by dialing 800-207-7077 from within the U.S. or Canada, or 314-255-1301 if calling internationally. Please reference PIN number 4989 when prompted.

About LML Payment Systems Inc. (www.lmlpayment.com)

The Corporation, through its subsidiary LML Payment Systems Corp., is a financial payment processor providing check processing solutions including electronic check authorization, electronic check conversion (ECC) and primary and secondary check collection including electronic check re-presentment (RCK) to national, regional and local retailers. We also provide selective routing of debit, credit and EBT transactions to third party processors and banks for authorization and settlement. The Corporation's intellectual property estate, owned by subsidiary LML Patent Corp, includes U.S. Patent 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.

Statements contained in this news release which are not historical facts are forward-looking statements, subject to uncertainties and risks. For a discussion of the risks associated with the Corporation's business, please see the documents filed by the Corporation with the SEC.

                       LML PAYMENT SYSTEMS INC.

                      CONSOLIDATED BALANCE SHEETS
                (In U.S. Dollars, except as noted below)
                              (Unaudited)


                                                December 31,    March 31,
                                                    2006          2006
                                                ------------  ------------

  ASSETS
Current Assets
Cash and cash equivalents                       $ 10,359,948  $  3,691,632
Restricted cash                                      250,000       250,000
Accounts receivable, less allowances of
 $46,886 and $46,145, respectively                   430,317       436,475
Prepaid expenses                                     271,342       374,887
                                                ------------  ------------
Total Current Assets                              11,311,607     4,752,994
                                                ------------  ------------

Capital Assets, net                                  179,495       201,036

Patents, net                                         977,125     1,093,392

Other Assets                                         130,102        30,102
                                                ------------  ------------

TOTAL ASSETS                                      12,598,329     6,077,524
                                                ============  ============

  LIABILITIES
Current Liabilities
Accounts payable                                     545,221     1,104,034
Accrued liabilities                                  184,794       165,083
Accrued compensation                                 202,813       173,444
Current portion of long-term debt                      1,802        22,458
Current portion of deferred revenue                1,526,551       260,121
                                                ------------  ------------
Total Current Liabilities                          2,461,181     1,725,140

Long-term debt                                         4,654             -

Deferred revenue                                   6,176,248        10,985

                                                ------------  ------------
Total Liabilities                                  8,642,083     1,736,125
                                                ------------  ------------

Commitments and contingencies


  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, 20,207,094 and 20,194,094
 shares issued and outstanding, respectively      32,774,368    32,710,018

Contributed Surplus                                3,254,000     2,544,312
Deficit                                          (32,072,122)  (30,912,931)
                                                ------------  ------------
Total Shareholders' Equity                         3,956,246     4,341,399
                                                ------------  ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        12,598,329     6,077,524
                                                ============  ============






                       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,

                        -----------  -----------  -----------  -----------
                            2006         2005         2006         2005
                        -----------  -----------  -----------  -----------

REVENUE                 $ 1,516,415  $ 1,205,604  $ 4,962,636  $ 3,923,644

COSTS AND EXPENSES
  Costs of operations     1,236,984    1,175,308    3,721,526    3,425,433
  Sales, general and
   administrative
   expenses (includes
   stock-based
   compensation expense
   of $262,183 for
   three months ended
   December 31, 2006
   (three months ended
   December 31, 2005 -
   $140,342) and
   $688,042 for nine
   months ended
   December 31, 2006
   (nine months ended
   December 31, 2005 -
   $801,836))               726,072    1,054,013    2,335,630    3,960,187

  Amortization and
   depreciation              72,251       91,970      231,382      528,048
                        -----------  -----------  -----------  -----------

LOSS BEFORE OTHER
 (EXPENSES) INCOME AND
 INCOME TAXES              (518,892)  (1,115,687)  (1,325,902)  (3,990,024)

  Other (expenses)
   income, net             (524,995)      (1,209)    (143,911)    (229,793)
  Interest income, net      124,027       25,046      344,868       99,032
                        -----------  -----------  -----------  -----------

LOSS BEFORE INCOME
 TAXES                     (919,860)  (1,091,850)  (1,124,945)  (4,120,785)

  Income taxes                4,200        7,840       34,246       21,663
                        -----------  -----------  -----------  -----------

NET LOSS                   (924,060)  (1,099,690)  (1,159,191)  (4,142,448)

DEFICIT, beginning of
 period                 (31,148,062) (29,308,596) (30,912,931) (26,265,838)
                        -----------  -----------  -----------  -----------

DEFICIT, end of period  (32,072,122) (30,408,286) (32,072,122) (30,408,286)
                        ===========  ===========  ===========  ===========

LOSS PER SHARE, basic
 and diluted                  (0.05)       (0.06)       (0.06)       (0.21)
                        ===========  ===========  ===========  ===========

WEIGHTED AVERAGE SHARES
 OUTSTANDING
  Basic                  20,207,094   20,176,453   20,206,189   20,156,209
  Diluted                20,207,094   20,176,453   20,206,189   20,156,209







                           LML PAYMENT SYSTEMS INC.

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In U.S. Dollars)
                                 (Unaudited)


                        Three Months Ended          Nine Months Ended
                           December 31,                December 31,

                    --------------------------  --------------------------
                        2006          2005          2006          2005
                    ------------  ------------  ------------  ------------

Operating
 Activities:
  Net Loss          $   (924,060) $ (1,099,690) $ (1,159,191) $ (4,142,448)
  Adjustments to
   reconcile net
   loss to net cash
   (used in)
   provided by
   operating
   activities
    Provision for
     losses on
     accounts
     receivable                -             -        24,464        14,989
    Amortization and
     depreciation         72,251        91,970       231,382       528,048
    Gain on sale of
     capital assets       (3,000)            -        (3,000)            -
    Stock-based
     compensation        262,183       140,342       688,042       801,836
    Stock-based
     compensation –
     future income
     taxes                     -         3,640        21,646         9,063

Changes in
 operating assets
 and liabilities
  Accounts
   receivable             68,099        32,042       (18,306)       54,611
  Prepaid expenses        71,437        90,397       103,545       282,767
  Other assets           540,787             -       540,787        10,952
  Accounts payable
   and accrued
   liabilities           (36,580)      149,928      (509,733)      735,635
  Deferred revenue      (293,571)       19,020     7,431,693        18,024
                    ------------  ------------  ------------  ------------
Net cash (used in)
 provided by
 operating
 activities             (242,454)     (572,351)    7,351,329    (1,686,523)
                    ------------  ------------  ------------  ------------

Investing
 Activities:
  Other assets          (407,299)            -      (640,787)            -
  Proceeds from sale
   of capital assets       3,000             -         3,000             -
  Capital asset
   expenditures          (54,183)      (65,495)      (79,647)     (139,322)
  Patents                 (4,895)       (8,549)       (6,147)       (8,760)
                    ------------  ------------  ------------  ------------
Net cash provided
 by (used in)
 investing
 activities             (463,377)      (74,044)     (723,581)     (148,082)
                    ------------  ------------  ------------  ------------

Financing
 Activities:
  Payments on
   capital leases           (658)       (9,816)      (21,009)      (28,851)
  Payments on
   long-term
   borrowing                   -        (2,661)       (2,773)       (7,756)
  Proceeds from
   exercise of
   stock options               -       151,000        64,350       193,325
                    ------------  ------------  ------------  ------------
Net cash (used in)
 provided by
 financing
 activities                 (658)      138,523        40,568       156,718
                    ------------  ------------  ------------  ------------

(DECREASE) INCREASE
 IN CASH AND CASH
 EQUIVALENTS            (706,489)     (507,872)    6,668,316    (1,677,887)

Cash and cash
 equivalents,
 beginning of
 period               11,066,437     4,891,806     3,691,632     6,061,821
                    ------------  ------------  ------------  ------------

Cash and cash
 equivalents, end
 of period            10,359,948     4,383,934    10,359,948     4,383,934
                    ============  ============  ============  ============

Contact Information


  • CONTACTS:

    Patrick H. Gaines
    President and CEO
    (604) 689-4440

    Investor Relations
    (800) 888-2260