Mint Technology Corp.
TSX VENTURE : MIT

Mint Technology Corp.

May 28, 2013 17:00 ET

Mint Releases 2012 Annual Financial Statements, Management Discussion & Analysis and Business Update

TORONTO, ONTARIO--(Marketwired - May 28, 2013) -

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Mint Technology Corp. (TSX VENTURE:MIT) ("Mint" or the "Company"), is pleased to announce that it has today filed its Financial Statements, Management Discussion and Analysis ("MD&A") and related CEO and CFO Certificates for the for the 12 months ended December 31, 2012 (the "Annual Filings").

The year ended December 31, 2012 (the "Period") was a period of significant capital financing work including legal and accounting due diligence for the preparation of a prospectus (subsequently withdrawn) and subsequent structuring of a significant financing package which was announced on April 9, 2013.

The unexpected lengthy prospectus approval process and then withdrawal of the prospectus significantly postponed Mint's plans to grow its business during Q4. The withdrawal of the prospectus and subsequent loss of anticipated financing from the prospectus caused the termination of Mint's contract to acquire a money transfer business which was expected to contribute to Mint's anticipated business growth for the period. Delivery of anticipated results from both our microfinance and mobile top up business units was also affected by the delay in securing the financing required to grow these businesses.

Despite the financing delay, the management time consumed in the prospectus exercise and the terminated business acquisition, Mint continued to build its business presence in Saudi Arabia, Egypt and Qatar and to build its microfinance and mobile top up eVoucher businesses. Mint also continued the migration of its UAE payroll cards to its own platform for processing through Mint Global Processing LLC.

Chris R Hogg, Executive Chairman, said today, "The last 7 months have been our toughest with a number of unexpected setbacks but Mint now heads into the 2nd half of this year with presence in 5 MENA region markets, it has financed and built 4 complementary business units and is confident of closing the announced comprehensive financing package of up to $40m for growth at a time when its business model and platform is in great demand by corporate clients, governments, telecommunications companies and banks alike."

Management provides the following highlights from the financial statements filed today:

  • Revenue for the year ended December 31, 2012 increased $703,379 to $4,413,156 (+18.96%) from $3,709,777 for the year ended August 31, 2011.

  • Net Loss for the 12 months ended December 31, 2012 was ($11,859,932) compared to ($4,711,655) (-151.71%) reported for the 12 months ended December 31, 2011. The Company incurred a number of major non-recurring items which contributed to the Net Loss which are outlined below.

  • Total Assets increased from $7,527,968 at December 31, 2011 to $13,601,865 at 31 December, 2012 and Total Liabilities increased from $18,222,795 at December 31, 2011 to $24,637,854 at December 31, 2012.

  • The Corporation incurred a series of Major and some Non-Recurring Extraordinary expenditures during the period under review and these are as per the following "Extraordinary Items Analysis". In addition, for the purposes of this review, major Non-Cash items are also highlighted:

Group Comprehensive Loss for the Period ($11,963,837 )
Add Back Interest, Tax, Depreciation, Amortization
Interest $ 1,636,958
Accretion $ 1,438,082
Tax 0
Depreciation $ 378,400
Amortization $ 1,236,454
Earnings before interest, tax, depreciation and amortization $ (7,273,943 )
Total Non-Recurring Items $ 7,402,592
Total Non-Cash Items $ (6,546,533 )
Adjusted Loss (after Non-Recurring & Non-cash items) $ (6,417,884 )

"Mint has secured through significant investment and strong organic growth in its core business, a market position now from which it can grow profitably. Mint has also announced a comprehensive financing package and now for the first time in its recent history, will upon completing that financing have a fully funded business plan ready to capitalize on a number of future opportunities including the delivery of revenue and earnings from the aforementioned business units," Nabil Bader, Mint President and CEO said today.

A summary of the business units follows:

Mint Middle East - UAE Branch Activities
The branch continues to bear expenses on behalf of other business units principally Mint Global Processing, Mint Egypt, Mint Qatar and Mint Saudi Arabia plus other business development functions. Commencing in Q1 2013, only those expenses directly attributable to the MME UAE branch payroll card business will be allocated to that business unit. Future Segment Analysis will separate expenses for other business units accordingly.
In the 4 months since year end to April 30, 2013 a total of 28,889 new cards have been Issued under new contracts with a range of employers.
The total number of cards as of December 31, 2012 issued and being billed (generating revenue) is as follows:
Cards Issued: (actual number of cards issued and "live" on database): 357,715
Cards Billed: (number of cards that had payrolls processed during December 2012): 254,014
The UAE payroll card business continues to grow at approximately 8,000 new cards net per month or an annualized growth rate of approximately 27%.
The UAE Government recently announced the extension of the Wages Protection System to include over 1,000,000 domestic workers in the Country and MME is well placed to capture its share of this anticipated growth.
Mint Capital LLC
Operations commenced on September 1, 2012, at the Company's microfinance business unit with the commencement of a pilot loan program in October 2012 and since that time a full time sales force, loan management system and extensive testing of the interfaces between Mint Middle East and Mint Capital have been completed. Legal framework and compliance systems have been completed and the business is now fully operational.
Mint will announce before June 30, 2013 details of the proposed financing necessary to grow this business.
Mint Electronic Payment Systems LLC
Business growth stalled during Q4 when financing was delayed but since March 2013 has been adding Merchants aggressively and expects to have over 2000 merchants generating Revenue by the end of June 2013.
The MEPS business will be a significant contributor to Mints 2013 Revenues and Earnings and further guidance will be provided before June 30, 2013.
Mint Middle East - Non UAE Activities
During the year ended December 31, 2012, Mint continued to invest heavily in the expansion of the Mint activities outside of UAE in the MENA region and in particular the establishment of a business presence in Qatar, Egypt and Saudi Arabia, the establishment of Mint Global Processing LLC including significant direct salary, office, equipment costs and legal fees, and the costs associated with the acquisition of ePAY, the mobile airtime business network. This expansion continues to involve significant investment in people, travel and accommodation, legal fees and professional advisors.
Mint Egypt
In March 2013, Mint signed a Joint Venture Agreement, Shareholders Agreement and Management Agreement for a Joint venture company, Mint ECARD JSC. Mint's partner and shareholder ECARD (Egyptian Company for Agricultural and Rural Development) is a wholly owned subsidiary of PBDAC, a government owned Bank serving the rural community in Egypt. Mint ECARD is now working on a contract to provide financial services and payments solutions to very large communities of unbanked, rural workers including the building and deployment of a prepaid card, ATM, and POS network platform for Egyptian farmers.
Specific guidance in respect to this business unit will be provided before June 30, 2013.
Mint Saudi Arabia
In February 2013, Mint and The Saudi Investment Bank ("SAIB" or the "Bank") signed a Vendor Agreement (the "Agreement"). The Agreement provides for Mint to supply SAIB its software and financial products solution to permit the Bank to launch a prepaid card project and in particular to offer payroll prepaid cards in accordance with the recently announced Wage Protection System law. In the initial phase, prepaid payroll cards will be launched which will also offer remittance to overseas countries. The target labor market size in KSA is expected to be in the region of 4,000,000 workers.
The completion of the build of this project is on schedule and on budget and is expected to complete in early August 2013.
Mint Saudi Arabia/SAIB partnership is expected to contribute to Revenues and Earnings from September 2013.
Mint Qatar
During the period Mint Qatar was incorporated, an office presence established and work commenced on a strategic partnership with one of the largest corporations in the country.
Further information will be released during July 2013.
Mint Global Processing LLC ("MGP")
Mint Global Processing, through Ajman Bank was certified by the UAE Central Bank as an authorized third party transaction processor in Q2 2012. Since this time the business has been resourced with management and support staff and has been actively engaged in a number of projects including working on the approval and deployment of a MasterCard product (approved in Q4 2012), migration of MME UAE branch cards from legacy system to MGP's system platform, design and deployment of a card management, ATM switch and processing platform for Mint's contract in Saudi Arabia and the design of Business Requirements Documents for the deployment of a card management, ATM switch and processing platform for Mint Egypt and Mint Qatar.

In connection with the audit of the year end financial statements, Mint has changed the treatment of three items disclosed in previous interim financial statements:

1. Accounting for acquisition by Mint of the minority 40% in Mint Middle East LLC.

During 2012, the Company determined that the acquisition of the remaining 40% of MME on July 6, 2011, was incorrectly accounted for as an increase in goodwill as at August 31, 2011. In accordance with IAS 27 (Consolidated and separate financial statements), changes in a parent's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

As there was no change in the Company's control over MME on July 6, 2011, these consolidated financial statements have been restated to retrospectively account for the acquisition of the remaining 40% of MME as an equity transaction, by adjusting goodwill and the deficit for the year ended August 31, 2011 and the period ended December 31, 2011 by $3,975,528 as follows:

  • the comparative consolidated statements of financial position as at December 31, 2011 and August 31, 2011 have been restated to reduce goodwill and total assets by $3,975,528; and

  • the deficit for the four month period ended December 31, 2011 and year ended August 31, 2011 have been increased by $3,975,528.

There was no net impact as a result of this restatement on the consolidated statements of operations or cash flows for the four month period ended December 31, 2011 and year ended August 31, 2011.

2. Mint Electronic Payment Services LLC ("MEPS") - Gross vs Net revenue recognition

In Q3, 2012, the Corporation reported MEPS revenues on a gross basis in the Consolidated Statements of Loss and Comprehensive Loss. In the 2012 Financial Statements, the MEPS revenues have been reported on a net revenue basis (i.e. gross revenue less cost of sales and sales commission). This restatement will have no impact on the Comprehensive Loss in Q3.

3. January 2012 private placement

On January 20, 2012, the Company approved the restructuring of the private placement previously announced November 17, 2011. Outstanding payable of $768,792 was converted into 6,150,337 common shares and 4,337,534 Common Share purchase warrants of Mint. The fair value attributed to the warrants was $461,889 (note 13a) and the fair value attributed to the common shares was $922,552, based on the value of the common shares on the date of settlement. The restructuring resulted in a loss on extinguishment of debt in the amount of $615,649, representing the excess of the fair value of the Common Share purchase warrants and common shares over the carrying value of the outstanding payable.

As a result of these changes in accounting treatment in the annual statements, Mint intends to refile the financial statements and MD&A reports for each of Q1, Q2 and Q3 2012 and this will be done no later than Tuesday, June 11th, 2013.

FORWARD-LOOKING STATEMENTS

Certain statements in this news release constitute "forward-looking" statements. These statements relate to future events or our future performance. Forward-looking statements include the anticipated closing of the comprehensive financing package of up to $40m, the delivery of revenue and earnings from the business units, the significant contribution of the MEPS business to Mints 2013 revenues and earnings, the completion of the build of the Saudi Arabia project in early August 2013, and the contribution to revenues and earnings from September 2013 by the Mint Saudi Arabia/SAIB partnership. All such statements involve substantial known and unknown risks, uncertainties and other factors which may cause the actual results to vary from those expressed or implied by such forward-looking statements, including the risk that there is insufficient investor demand to complete the minimum offering of $20 million under the comprehensive financing package, the reduction or elimination of revenue contributions by the Company's business units if the comprehensive financing package does not close and any technical or regulator problems which might delay the build of the Saudi Arabia project. Forward-looking statements involve significant risks and uncertainties, they should not be read as guarantees of future performance or results, and they will not necessarily be accurate indications of whether or not such results will be achieved. Actual results could differ materially from those anticipated due to a number of factors and risks. Although the forward-looking statements contained in this news release are based upon what management of Mint believes are reasonable assumptions on the date of this news release, Mint cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements contained in this press release are made as of the date hereof and Mint disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

ABOUT MINT TECHNOLOGY CORP

Established in 2004, Mint is the world's first vertically integrated prepaid card and payroll services provider with its own ATM network, payment processing platform and proprietary branded card product delivered to workers in the United Arab Emirates and expanding to other parts of the Middle East. Mint operates through 4 subsidiaries, Mint Middle East LLC, a payroll card services provider; Mint Capital LLC, a financial products distribution company; Mint Global Processing Inc., a fully integrated third party processing platform; and MEPS, a mobile airtime POS and Merchant network solutions business. Mint has 98 employees in 8 offices in UAE (3), Qatar, Jordan, Egypt, USA and Canada where Mint is listed on the TSX Venture Exchange: MIT.

For additional information please visit www.mintinc.com.

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