LML Reports Profitable Results for the Second Quarter and Six Month Period of Fiscal 2013

LML Reports Profitable Results for the Second Quarter and Six Month Period of
Fiscal 2013

VANCOUVER, British Columbia, Nov. 9, 2012 (GLOBE NEWSWIRE) -- LML PAYMENT
SYSTEMS INC. ("LML") (Nasdaq:LMLP), a leading payments technology provider of
financial payment processing solutions for e-commerce and traditional
businesses, reports results for its second quarter and six month period ended
September 30, 2012.

Revenue for the second quarter ended September 30, 2012 was $5.8 million
compared to $13 million in revenue for the second quarter ended September 30,
2011. Gross profit for the quarter was $2.5 million or 43% compared to $7.3
million or 57% last year. Net income for the quarter was $349,000, or $0.01
per share, compared to net income of $3.4 million or $0.12 per share, for the
second quarter ended September 30, 2011.

Revenue for the six month period ended September 30, 2012 was $11.4 million
compared to revenue of $18.9 million for the six months ended September 30,
2011. Gross profit for the six months ended September 30, 2012 was $4.8
million compared to gross profit of $10 million for the six months ended
September 30, 2011. Net income for the same period was $796,000, or $0.03 per
share, compared to net income of $4.1 million or $0.15 per share (basic), for
the same period during fiscal 2012.

Highlights

  *Transaction Payment Processing segment revenue increases 31% year over
    year for the second quarter
  *Added over 770 customers during the quarter, increasing total customer
    base to over 15,000
  *Subsidiary Beanstream named a Sage North America Endorsed/OEM development
    partner of the year for 2012

Pending Arrangement

As previously announced, on September 21, 2012, LML entered into an
Arrangement Agreement (the "Arrangement Agreement") with Digital River, Inc.
("Digital River") and LML Acquisition Corp., a direct wholly-owned subsidiary
of Digital River ("Merger Sub"). The Arrangement Agreement contemplates the
acquisition by Digital River, through Merger Sub, of all of the outstanding
equity securities of LML pursuant to a "plan of arrangement" (the
"Arrangement") under the Business Corporations Act (British Columbia), under
which LML is now governed. LML's Board of Directors, acting upon the unanimous
recommendation of a special committee of the Board of Directors comprised of
all the independent members of the Board of Directors, has approved and
adopted the Arrangement Agreement and has recommended that LML's shareholders
vote to approve the Arrangement Agreement. The Arrangement Agreement has also
been approved by the boards of directors of all other parties to the
Arrangement Agreement.

Additional Information and Where to Find It

LML has filed a preliminary proxy statement with the SEC indicating its
intention to call a special meeting of its shareholders to vote on the
Arrangement and the Arrangement Agreement. Completion of the Arrangement is
subject to the approval of the shareholders of LML, regulatory approvals, and
other customary conditions. LML's shareholder meeting to vote on the
Arrangement Agreement and the closing of the Arrangement are expected to occur
during the latter half of the fourth quarter of 2012 or the first quarter of
2013; however, no assurance can be given that the Arrangement Agreement will
be approved by LML's shareholders or that the Arrangement will ultimately be
completed. SHAREHOLDERS OF LML ARE URGED TO READ THE DEFINITIVE PROXY
STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION CONCERNING THE ARRANGEMENT AND LML. Shareholders of LML will be
able to obtain a free copy of the definitive proxy statement, as well as other
filings containing information about LML and the Arrangement, when available,
without charge, at the SEC's Internet site (www.sec.gov). In addition, copies
of the definitive proxy statement and other filings containing information
about LML and the Arrangement can be obtained, when available and without
charge, by directing a request to LML, Attention: Investor Relations, 1140
West Pender Street, Suite 1680, Vancouver, British Columbia V6E 4G1, by phone
at (800) 888-2260, or on LML's website at www.lmlpayment.com.

LML, Digital River and their respective directors and executive officers and
other members of management and employees may be deemed to be participants in
the solicitation of proxies from LML's shareholders in respect of the
Arrangement. You can find information about LML's directors and executive
officers in LML's definitive annual proxy statement filed with the SEC on July
31, 2012. You can obtain free copies of LML's annual proxy statement, and
LML's definitive proxy statement in connection with the Arrangement (when it
becomes available), by contacting LML's investor relations department.
Additional information regarding the interests of LML's directors and
executive officers will be included in the definitive proxy statement and the
other relevant documents filed with the SEC when they become available. You
can find information about Digital River's directors and executive officers in
Digital River's definitive annual proxy statement filed with the SEC on April
18, 2012. You can obtain free copies of Digital River's annual proxy statement
by contacting Digital River's investor relations department.

About LML Payment Systems Inc.

LML Payment Systems Inc., through its Canadian subsidiary Beanstream Internet
Commerce Inc., and its U.S. subsidiaries Beanstream Internet Commerce Corp.
and LML Payment Systems Corp., is a leading provider of financial payment
processing solutions for e-commerce and traditional businesses. We provide
credit card processing, online debit, electronic funds transfer, automated
clearinghouse payment processing and authentication services, along with
routing of selected transactions to third party processors and banks for
authorization and settlement. For more details about LML Payment Systems,
visit www.lmlpayment.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include all passages containing verbs such as
"aims," "anticipates," "estimates," "expects," "intends," "plans," "predicts,"
"projects" or "targets" or nouns corresponding to such verbs. Forward-looking
statements also include any other passages that are primarily relevant to
expected future events or that can only be evaluated by events that will occur
in the future. Forward-looking statements are based on the opinions and
estimates of the management at the time the statements are made and are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those anticipated in the forward-looking statements.
Factors that could affect LML's actual results include, among others, the
impact, if any, of stock-based compensation charges, the potential failure to
establish and maintain strategic relationships, inability to integrate recent
and future acquisitions, inability to develop new products or product
enhancements on a timely basis, inability to protect our proprietary rights or
to operate without infringing the patents and proprietary rights of others,
and quarterly and seasonal fluctuations in operating results. More information
about factors that potentially could affect LML's financial results is
included in LML's quarterly reports on Form 10-Q and our most recent annual
report on Form 10-K filed with the Securities and Exchange Commission. Readers
are cautioned not to place undue reliance upon these forward-looking
statements that speak only as to the date of this release. Except as required
by law, LML undertakes no obligation to update any forward-looking or other
statements in this press release, whether as a result of new information,
future events or otherwise.

LML PAYMENT SYSTEMS INC.
                                                               
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(In U.S. Dollars)
(Unaudited)
                                                               
                               Three Months Ended     Six Months Ended
                               September 30           September 30
                               2012       2011        2012        2011
                                                               
                                                               
REVENUE                         $5,759,228 $12,921,122 $11,372,260 $18,890,387
COST OF REVENUE                 3,280,872  5,610,876   6,531,844   8,932,702
GROSS PROFIT                    2,478,356  7,310,246   4,840,416   9,957,685
                                                               
OPERATING EXPENSES                                              
General and administrative      1,330,308  981,091     2,296,495   1,912,095
Sales and marketing             273,928    214,727     525,152     522,237
Product development and         307,769    248,516     617,743     522,211
enhancement
INCOME BEFORE OTHER INCOME      566,351    5,865,912   1,401,026   7,001,142
(LOSS) AND INCOME TAXES
                                                               
OTHER INCOME (LOSS)                                             
Foreign exchange (loss) gain    (68,794)   (34,394)    (73,000)    (2,744)
Interest income                 43,744     11,708      70,501      28,885
                               (25,050)   (19,686)    (2,499)     26,141
                                                               
INCOME BEFORE INCOME TAXES      541,301    5,843,226   1,398,527   7,027,283
                                                               
Income tax expense (recovery)                                   
Current                         319,610    2,222,008   775,229     2,428,205
Deferred                        (127,148)  207,485     (172,870)   497,999
                               192,462    2,429,493   602,359     2,926,204
                                                               
NET INCOME                      348,839    3,413,733   796,168     4,101,079
                                                               
OTHER COMPREHENSIVE INCOME                                      
(LOSS)
Unrealized foreign exchange                                     
gain (loss) on translation of   231,359    (398,154)   100,200     (383,791)
foreign operations
                                                               
TOTAL COMPREHENSIVE INCOME      $580,198   $3,015,579  $896,368    $3,717,288
                                                               
EARNINGS PER SHARE, basic       $0.01      $0.12       $0.03       $0.15
EARNINGS PER SHARE, diluted     $0.01      $0.12       $0.03       $0.14
                                                               
WEIGHTED AVERAGE SHARES                                         
OUTSTANDING
Basic                           28,246,684 28,233,434  28,246,684  28,191,808
Diluted                         29,107,280 28,898,811  28,858,501  28,932,332



LML PAYMENT SYSTEMS INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In U.S. Dollars, except as noted below)
(Unaudited)
                                                                
                                                   September 30, March 31,
                                                   2012          2012
ASSETS                                                           
Current Assets                                                   
Cash and cash equivalents                           $27,402,745   $26,783,754
Funds held for merchants                            12,391,538    9,485,182
Short-term investments                              2,586,393     3,290,393
Restricted cash                                     175,000       175,000
Accounts receivable, less allowance of $190,513     1,530,081     1,272,580
(March 31, 2012 -- $27,397)
Other receivable                                    852,889       --
Inventory                                           38,049        --
Corporate taxes receivable                          358,724       373,939
Prepaid expenses                                    244,473       331,361
Total current assets                                45,579,892    41,712,209
                                                                
Property and equipment, net                         197,521       121,496
Patents                                             31,093        120,457
Restricted cash                                     260,395       258,095
Deferred tax assets                                 982,821       809,951
Goodwill                                            17,874,202    17,874,202
Other intangible assets                             3,472,462     3,720,037
Other assets                                        20,919        20,796
Total assets                                        $68,419,305   $64,637,243
                                                                
LIABILITIES                                                      
Current Liabilities                                              
Accounts payable                                    $809,973      $720,666
Accrued liabilities                                 1,860,478     1,445,490
Corporate taxes payable                             --            386,607
Funds due to merchants                              12,391,538    9,485,182
Current portion of obligations under finance lease  2,460         2,460
Current portion of deferred revenue                 811,048       1,342,828
Total current liabilities                           15,875,497    13,383,233
                                                                
Obligations under finance lease                     3,510         4,920
Total liabilities                                   15,879,007    13,388,153
                                                                
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, 28,246,684 issued and outstanding       53,918,912    53,918,912
(March 31, 2012 - 28,246,684)
                                                                
Contributed surplus                                 10,396,434    10,001,594
Warrants                                            113,662       113,662
Deficit                                             (12,261,392)  (13,057,560)
Accumulated other comprehensive income              372,682       272,482
Total equity                                        52,540,298    51,249,090
                                                                
Total liabilities and equity                        $68,419,305   $64,637,243




LML PAYMENT SYSTEMS INC.
                                                               
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars)
(Unaudited)
                                                               
                              Three Months Ended      Six Months Ended
                              September 30            September 30
                              2012        2011        2012        2011
                                                               
Operating Activities:                                           
Net income                     $348,839    3,413,733   $796,168    4,101,079
Adjustments to reconcile net
income to net cash (used in)                                    
provided by operating
activities
Amortization of property and   23,375      25,038      45,575      59,278
equipment
Amortization of intangible     168,469     165,645     336,938     331,290
assets
Share-based payments           195,733     152,657     394,840     289,094
Deferred income taxes          (127,148)   207,485     (172,870)   497,999
Foreign exchange (gain) loss   (124,223)   195,701     (70,242)    191,998
                                                               
Changes in non-cash operating                                   
working capital
Accounts receivable            (54,346)    838,251     (234,589)   (36,299)
Other receivable               (852,889)   --          (852,889)   --
Inventory                      1,188       --          (37,317)    --
Corporate taxes receivable     (90,723)    (106,308)   6,375       (165,477)
Prepaid expenses               31,314      10,818      88,030      32,325
Accounts payable and accrued   547,298     (309,966)   494,922     (447,990)
liabilities
Corporate taxes payable        (836,236)   1,631,891   (376,158)   (2,706,864)
Deferred revenue               (298,362)   (339,475)   (539,387)   (648,681)
Net cash (used in) provided by (1,067,711) 5,885,470   (120,604)   1,497,752
operating activities
                                                               
Investing Activities:                                           
Acquisition of short term      --          (3,294,525) --          (3,294,525)
investments
Maturity of short term         766,125     --          766,125     --
investments
Acquisition of property and    (93,238)    (21,655)    (119,769)   (42,897)
equipment
Net cash provided by (used in) 672,887     (3,316,180) 646,356     (3,337,422)
investing activities
                                                               
Financing Activities:                                           
Proceeds from exercise of      --          --          --          205,375
stock options
Net cash provided by financing --          --          --          205,375
activities
                                                               
Effects of foreign exchange               
rate changes on cash and cash  237,008     (375,299)   93,239      (362,912)
equivalents
                                                               
(DECREASE) INCREASE IN CASH                         618,991     (1,997,207)
AND CASH EQUIVALENTS           (157,816)   2,193,991
                                                               
Cash and cash equivalents,     27,560,561  22,726,293  26,783,754  26,917,491
beginning of period
                                                               
Cash and cash equivalents, end $27,402,745 $24,920,284 $27,402,745 $24,920,284
of period
                                                               
Supplemental disclosure of                                      
cash flow information
Taxes paid                     $1,260,548  $697,000    $1,260,548  $5,296,921

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

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