EX-99.1 2 exhibit.htm EXHIBIT 99.1 Exhibit 99.1
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LML REPORTS RESULTS FOR THE THIRD QUARTER OF FISCAL 2007

Increased Revenue of 25%
 
VANCOUVER, BC, 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.
 
cont’d



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.

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LML PAYMENT SYSTEMS INC.

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

   
December 31,
2006
  
March 31,
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 December 31,
  
Nine Months Ended 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 December 31,
  
Nine Months Ended 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
  

 

-30-
CONTACTS:

Patrick H. Gaines
Investor Relations
President and CEO
(800) 888-2260
(604) 689-4440