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LML Payment Systems Inc. Reports Operating Results (10-Q)

November 15, 2010 | About:
10qk

10qk

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LML Payment Systems Inc. (LMLP) filed Quarterly Report for the period ended 2010-09-30.

Lml Payment Systems Inc. has a market cap of $62.41 million; its shares were traded at around $2.29 with a P/E ratio of 22.9 and P/S ratio of 4.21. LMLP is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Revenue pertaining to our TPP segment consists of one-time set-up fees, monthly gateway fees, and transaction fees. TPP segment revenue for the three months ended September 30, 2010 was approximately $2,854,000, an increase of approximately $637,000 or approximately 28.7% from TPP segment revenue of approximately $2,217,000 for the three months ended September 30, 2009. TPP segment revenue originating in Canadian dollars was approximately $2,965,000CAD for the three months ended September 30, 2010 compared to approximately $2,433,000CAD for the three months ended September 30, 2009, an increase of approximately $532,000CAD or approximately 21.9%. The increase in TPP segment revenue was primarily attributable to an increase in our merchant base of approximately 13.3%. Transaction fees for the three months ended September 30, 2010 were approximately $2,333,000 compared to approximately $1,816,000 for the three months ended September 30, 2009, an increase of approximately $517,000 or approximately 28.5%. The amortized portion of one-time set-up fees recognized was approximately $46,000 for the three months ended September 30, 2010 compared to approximately $32,000 for the three months ended September 30, 2009, an increase of approximately $14,000 or approximately 43.8%. Monthly gateway fees for the three months ended September 30, 2010 were approximately $377,000 compared to approximately $290,000 for the three months ended September 30, 2009, an increase of approximately $87,000 or approximately 30%.

General and administrative expenses decreased to approximately $999,000 from approximately $1,077,000 for the three months ended September 30, 2010 and 2009, respectively, a decrease of approximately $78,000 or approximately 7.2%. Included in general and administrative expenses are TPP segment expenses of approximately $195,000 for the three months ended September 30, 2010, a decrease of approximately $1,000 compared to general and administrative expenses of approximately $196,000 for the three months ended September 30, 2009. CP/SL segment general and administrative expenses decreased approximately $19,000 or approximately 17% from approximately $112,000 for the three months ended September 30, 2009 to approximately $93,000 for the three months ended September 30, 2010. Also included in general and administrative expenses are stock-based compensation expenses of approximately $247,000 for the three months ended September 30, 2010 compared to approximately $269,000 for the three months ended September 30, 2009, a decrease of approximately $22,000 or approximately 8.2%.

Revenue pertaining to our TPP segment consists of one-time set-up fees, monthly gateway fees, and transaction fees. TPP segment revenue for the six months ended September 30, 2010 was approximately $5,671,000 as compared to TPP segment revenue of approximately $4,386,000 for the six months ended September 30, 2009, an increase of approximately $1,285,000 or approximately 29.3%. The increase in TPP segment revenue was primarily attributable to a strengthening Canadian dollar in relation to the U.S. dollar which increased approximately 10% from the prior fiscal six month period. Since a significant amount of our TPP segment originates in Canadian dollars, the conversion of this revenue to U.S. dollars was at an increased exchange rate when compared to the prior fiscal six month period conversion. TPP segment revenue originating in Canadian dollars was approximately $5,863,000CAD for the six months ended September 30, 2010 compared to $4,962,000CAD for the six months ended September 30, 2009, an increase of approximately $901,000CAD or approximately 18.2%. Transaction fees for the six months ended September 30, 2010 were approximately $4,639,000 compared to transaction fees of approximately $3,596,000 for the six months ended September 30, 2009, an increase of approximately $1,043,000 or approximately 29%. The amortized portion of one-time set-up fees recognized was approximately $99,000 for the six months ended September 30, 2010 compared to one-time set-up fees for the six months ended September 30, 2009 of approximately $75,000, an increase of approximately $24,000 or approximately 32%. Monthly gateway fees for the six months ended September 30, 2010 were approximately $742,000 compared to monthly gateway fees for the six months ended September 30, 2009 of approximately $556,000, an increase of approximately $186,000 or approximately 33.4%.

Cost of revenue increased from approximately $3,340,000 for the six months ended September 30, 2009, to approximately $5,741,000 for the six months ended September 30, 2010, an increase of approximately $2,401,000 or approximately 71.9%. The increase was primarily attributable to an increase in our IPL segment cost of revenue of approximately $1,422,000 from approximately nil for the six months ended September 30, 2009 to approximately $1,422,000 for the six months ended September 30, 2010 and partially attributable to an increase in TPP segment cost of revenue of approximately $895,000 or approximately 35.2% from approximately $2,544,000 for the six months ended September 30, 2009 to approximately $3,439,000 for the six months ended September 30, 2010. The increase in IPL segment cost of revenue was primarily attributable to the costs incurred in entering into the License Agreements with three of the defendants in the Patent Litigation during the six months ended September 30, 2010. The increase in TPP segment cost of revenue was partially attributable to an increase in transaction costs of approximately 36.8% consistent with the increase in transaction fee revenue and partially attributable to a strengthening Canadian dollar in relation to the U.S. dollar which increased approximately 10% from the prior fiscal six month period. Since a significant amount of our TPP segment cost of revenue originates in Canadian dollars, the conversion of these costs to U.S. dollars was at an increased exchange rate when compared to the prior fiscal six month period conversion. TPP segment costs of revenue originating in Canadian dollars was approximately $3,556,000CAD for the six months ended September 30, 2010 compared to $2,874,000CAD for the six months ended September 30, 2009, an increase of approximately $682,000CAD or approximately 23.7%. CP/SL segment cost of revenue was approximately $797,000 for the six months ended September 30, 2010 as compared to approximately $722,000 for the six months ended September 30, 2009, an increase in CP/SL segment cost of revenue of approximately $75,000 or approximately 10.4%.

General and administrative expenses increased to approximately $2,167,000 from approximately $2,025,000 for the six months ended September 30, 2010 and 2009, respectively, an increase of approximately $142,000 or approximately 7%. Included in general and administrative expenses for the six months ended September 30, 2010 are TPP segment expenses of approximately $470,000 as compared to approximately $371,000 for the six months ended September 30, 2009. CP/SL segment expenses increased to approximately $327,000 from approximately $225,000 for the six months ended September 30, 2010 and 2009 respectively, an increase of approximately $102,000 or approximately 45.3%. The increase in the TPP and CP/SL segments general and administrative expenses is primarily attributable to an increase of approximately $176,000 in legal fees primarily pertaining to the two patent infringement complaints filed against our subsidiaries, LML Payment Systems Corp. and Beanstream Internet Commerce Inc. in April, 2009. Also included in general and administrative expenses are stock-based compensation expenses of approximately $480,000 for the six months ended September 30, 2010 compared to approximately $538,000 for the six months ended September 30, 2009, a decrease of approximately $58,000 or approximately 10.8%.

Our liquidity and financial position consisted of approximately $8,414,000 in working capital as of September 30, 2010 compared to approximately $5,601,000 in working capital as of March 31, 2010. The increase in working capital was primarily attributable to an increase in cash and cash equivalents of approximately $2,152,000 resulting primarily from compensation received from License Agreements entered into during the six months ended September 30, 2010. Cash provided by operating activities was approximately $2,192,000 for the six months ended September 30, 2010, as compared to approximately $100,000 for the six months ended September 30, 2009, an increase in cash provided by operating activities of approximately $2,092,000. The increase in cash provided by operating activities was primarily attributable to an increase in cash received from License Agreements of approximately $1,843,000 for the six months ended September 30, 2010. Cash used in investing activities was approximately $30,000 for the six months ended September 30, 2010 as compared to approximately $11,000 for the six months ended September 30, 2009, an increase in cash used in investing activities of approximately $19,000. The increase in cash used in investing activities was primarily attributable to an increase in acquisition of property and equipment of approximately $15,000 for the six months ended September 30, 2010 as compared to the six months ended September 30, 2009. Cash used in financing activities was approximately $9,000 for the six months ended September 30, 2010 as compared to approximately $2,423,000 for the six months ended September 30, 2009, a decrease in cash used in financing activities of approximately $2,414,000. The decrease in cash used in financing activities was primarily due to the difference in the payments on the promissory notes relating to the acquisition of Beanstream. During the six months ended September 30, 2009 we made the second and final payment of approximately $2,321,000 on the promissoryRead the The complete Report

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