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

November 13, 2009 | About:
10qk

10qk

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LML Payment Systems Inc. (LMLP) filed Quarterly Report for the period ended 2009-09-30.

LML Payment Systems Inc. is a financial payment processor that provides check processing solutions for national, regional and local retail merchants in the United States. LML's processing services include check verification and collection services along with electronic processing services. Lml Payment Systems Inc. has a market cap of $21.4 million; its shares were traded at around $0.79 with a P/E ratio of 39.6 and P/S ratio of 1.8.

Highlight of Business Operations:

Transaction fees for the three months ended September 30, 2009 were approximately $1,816,000 compared to approximately $1,568,000 for the three months ended September 30, 2008, an increase of approximately $248,000 or approximately 15.8%. The increase in transaction fees was primarily attributable to a 107.6% increase in new customer contracts during the three months ended September 30, 2009 as compared to the three months ended September 30, 2008. The amortized portion of one-time set-up fees recognized was approximately $32,000 for the three months ended September 30, 2009 compared to approximately $36,000 for the three months ended September 30, 2008, a decrease of approximately $4,000 or approximately 11.1%. Monthly gateway fees for the three months ended September 30, 2009 were approximately $290,000 compared to approximately $254,000 for the three months ended September 30, 2008, an increase of approximately $36,000 or approximately 14.2%.

General and administrative expenses decreased to approximately $1,077,000 from approximately $1,183,000 for the three months ended September 30, 2009 and 2008, respectively, a decrease of approximately $106,000 or approximately 9.0%. Included in general and administrative expenses are TPP segment expenses of approximately $196,000 for the three months ended September 30, 2009, an increase of approximately $28,000 compared to general and administrative expenses of approximately $168,000 for the three months ended September 30, 2008. CP/SL segment expenses decreased to approximately $112,000 from approximately $180,000 for the three months ended September 30, 2009 and 2008 respectively, a decrease of approximately $68,000 or approximately 37.8%. The decrease in CP/SL segment general and administrative expenses is primarily attributable to staff reductions and cost savings relating to the relocation of our Wichita, Kansas office during the third quarter of our prior fiscal year. Also included in general and administrative expenses are stock-based compensation expenses of approximately $269,000 for the three months ended September 30, 2009 compared to stock-based compensation expenses of approximately $290,000 for the three months ended September 30, 2008, a decrease of approximately $21,000 or approximately 7.2%.

Transaction fees for the six months ended September 30, 2009 were approximately $3,596,000 compared to transaction fees of approximately $3,177,000 for the six months ended September 30, 2008, an increase of approximately $419,000. The increase in transaction fees was primarily attributable to a 117% increase in new customer contracts during the six months ended September 30, 2009 as compared to the six months ended September 30, 2008. The amortized portion of one-time set-up fees recognized was approximately $75,000 for the six months ended September 30, 2009 compared to one-time set-up fees for the six months ended September 30, 2008 of approximately $71,000, an increase of approximately $4,000. Monthly gateway fees for the six months ended September 30, 2009 were approximately $556,000 compared to monthly gateway fees for the six months ended September 30, 2008 of approximately $498,000, an increase of approximately $58,000.

Cost of revenue increased from approximately $3,018,000 for the six months ended September 30, 2008, to approximately $3,340,000 for the six months ended September 30, 2009, an increase of approximately $322,000 or approximately 10.7%. This increase was primarily attributable to an increase in TPP segment cost of revenue of approximately $411,000 or approximately 19.3%, from approximately $2,133,000 for the six months ended September 30, 2008 to approximately $2,544,000 for the six months ended September 30, 2009. The increase in TPP segment cost of revenue was primarily attributable to an increase in our transaction processing interchange fees as well as an increase in staffing within our customer service support team. CP/SL segment cost of revenue was approximately $722,000 for the six months ended September 30, 2009 as compared to approximately $809,000 for the six months ended September 30, 2008, a decrease in CP/SL segment cost of revenue of approximately $87,000 or approximately 10.8%.

General and administrative expenses decreased to approximately $2,025,000 from approximately $2,248,000 for the six months ended September 30, 2009 and 2008, respectively, a decrease of approximately $223,000 or approximately 9.9%. Included in general and administrative expenses for the six months ended September 30, 2009 are TPP segment expenses of approximately $371,000 as compared to approximately $312,000 for the six months ended September 30, 2008. The increase in TPP segment general and administrative expenses was primarily attributable to an increase in accounting and legal fees, bank charges and interest expense of approximately $39,000 collectively. CP/SL segment expenses decreased to approximately $225,000 from approximately $355,000 for the six months ended September 30, 2009 and 2008 respectively, a decrease of approximately $130,000 or approximately 36.6%. The decrease in CP/SL segment general and administrative expenses is primarily attributable to staff reductions and cost savings relating to the relocation of our Wichita, Kansas office during the third quarter of our prior fiscal year. Also included in general and administrative expenses are stock-based compensation expenses of approximately $538,000 for the six months ended September 30, 2009 compared to approximately $597,000 for the six months ended September 30, 2008, a decrease of approximately $59,000 or approximately 9.9%.

Our liquidity and financial position consisted of approximately $3,794,000 in working capital as of September 30, 2009 compared to approximately $2,762,000 in working capital as of March 31, 2009, an increase of approximately $1,032,000. The increase in working capital was primarily attributable to an increase in the current portion of future income taxes of approximately $601,000 resulting from the implementation of tax planning strategies during the six months ended September 30, 2009. Cash provided by operating activities was approximately $100,000 for the six months ended September 30, 2009, as compared to cash used in operating activities of approximately $803,000 for the six months ended September 30, 2008, an increase in cash provided by operating activities of approximately $903,000. The increase in cash provided by operating activities was primarily attributable to a decrease in cash used in discharging accounts payable and accrued liabilities of approximately $66,000 for the six months ended September 30, 2009 as compared to cash used in discharging accounts payable and accrued liabilities of approximately $834,000 for the six months ended September 30, 2008. Cash used in investing activities was approximately $11,000 for the six months ended September 30, 2009 as compared to approximately $86,000 for the six months ended September 30, 2008, a decrease in cash used in investing activities of approximately $75,000. The decrease in cash used in investing activities was primarily attributable to a reduction in acquisition of property and equipment of approximately $74,000 for the six months ended September 30, 2009 as compared to the six months ended September 30, 2008. Cash used in financing activities was approximately $2,423,000 for the six months ended September 30, 2009 as compared to approximately $2,941,000 for the six months ended September 30, 2008, a decrease in cash used in financing activities of approximately $518,000. 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 promissory notes as compared to the first payment of approximately $2,844,000 on the promissory notes made during the six months ended September 30, 2008, a difference in payments of approximately $523,000.

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