Yukon
Territory
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###-##-####
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(State
or other jurisdiction of
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(I.R.S.
Employer Identification No.)
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incorporation
or organization)
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Page
Number
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PART
I.
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FINANCIAL
INFORMATION
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Item
1.
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1
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1
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2
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3
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4
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5
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Item
2.
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16
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Item
3.
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25
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Item
4.
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25
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PART
II.
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26
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Item
1.
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26
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Item
1A.
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26
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Item
6.
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27
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28
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PART I.
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FINANCIAL
INFORMATION
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December
31, 2008
|
March
31, 2008
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
and cash equivalents
|
$ | 6,034,854 | $ | 9,749,768 | ||||
Funds
held for merchants (Note 6)
|
2,536,110 | 5,833,617 | ||||||
Restricted
cash
|
125,000 | 250,000 | ||||||
Accounts
receivable, less allowances of $32,168 and $32,168,
respectively
|
554,919 | 719,301 | ||||||
Prepaid
expenses
|
299,163 | 273,751 | ||||||
Total
current assets
|
9,550,046 | 16,826,437 | ||||||
Property
and equipment, net
|
241,713 | 246,828 | ||||||
Patents,
net
|
664,586 | 788,473 | ||||||
Restricted
cash
|
129,488 | 153,619 | ||||||
Other
assets
|
21,954 | 23,247 | ||||||
Goodwill
(Note 7)
|
17,874,202 | 15,903,077 | ||||||
Intangible
assets, net
|
5,329,275 | 5,700,637 | ||||||
TOTAL
ASSETS
|
$ | 33,811,264 | $ | 39,642,318 | ||||
LIABILITIES
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable
|
$ | 622,319 | $ | 1,745,679 | ||||
Accrued
liabilities
|
798,088 | 648,661 | ||||||
Corporate
taxes payable
|
21,180 | 573,240 | ||||||
Funds
due to merchants (Note 6)
|
2,536,110 | 5,833,617 | ||||||
Current
portion of obligations under capital lease
|
201,357 | 203,366 | ||||||
Current
portion of promissory notes
|
2,134,647 | 2,731,923 | ||||||
Current
portion of deferred revenue
|
1,287,897 | 1,448,921 | ||||||
Total
current liabilities
|
7,601,598 | 13,185,407 | ||||||
Obligations
under capital lease
|
17,379 | 177,573 | ||||||
Promissory
notes
|
- | 2,435,460 | ||||||
Deferred
revenue
|
3,649,567 | 4,606,379 | ||||||
TOTAL
LIABILITIES
|
11,268,544 | 20,404,819 | ||||||
Commitments
and Contingencies (Note 9)
|
||||||||
SHAREHOLDERS'
EQUITY
|
||||||||
Capital
Stock
|
||||||||
Class
A, preferred stock, CAD $1.00 par value, 150,000,000 shares authorized,
issuable in series, none issued or outstanding
|
- | - | ||||||
Class
B, preferred stock, CAD $1.00 par value, 150,000,000 shares authorized,
issuable in series, none issued or outstanding
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- | - | ||||||
Common
shares, no par value, 100,000,000 shares authorized, 27,116,408 and
26,341,832 issued and outstanding, respectively
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50,039,568 | 48,071,980 | ||||||
Accumulated
other comprehensive loss
|
(4,714 | ) | (19,046 | ) | ||||
Contributed
surplus
|
6,414,360 | 5,391,187 | ||||||
Deficit
|
(33,906,494 | ) | (34,206,622 | ) | ||||
Total
shareholders' equity
|
22,542,720 | 19,237,499 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 33,811,264 | $ | 39,642,318 |
Three
Months Ended
December
31
|
Nine
Months Ended
December
31
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
REVENUE
|
$ | 3,037,241 | $ | 3,397,810 | $ | 9,301,687 | $ | 8,036,074 | ||||||||
COST
OF REVENUE (includes stock-based compensation (“s.b.c.”) expense of
$37,464 for three months ended December 31, 2008 (three months ended
December 31, 2007 - $11,158) and $113,066 for nine months ended December
31, 2008 (nine months ended December 31, 2007 - $30,654))
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1,560,421 | 1,517,211 | 4,578,445 | 3,327,587 | ||||||||||||
GROSS
PROFIT (excludes amortization and depreciation expense)
|
1,476,820 | 1,880,599 | 4,723,242 | 4,708,487 | ||||||||||||
OPERATING
EXPENSES
|
||||||||||||||||
General
and administrative (includes s.b.c. expense of $274,296 for three months
ended December 31, 2008 (three months ended December 31, 2007 - $217,507)
and $871,254 for nine months ended December 31, 2008 (nine months ended
December 31, 2007- $451,526))
|
962,910 | 1,419,302 | 3,211,025 | 3,736,187 | ||||||||||||
Sales
and marketing (includes s.b.c. expense of $765 for three months ended
December 31, 2008 (three months ended December 31, 2007 - $1,463) and
$2,286 for nine months ended December 31, 2008 (nine months ended December
31, 2007 - $1,463))
|
77,149 | 44,847 | 237,715 | 161,539 | ||||||||||||
Product
development and enhancement (includes s.b.c. expense of $12,233 for three
months ended December 31, 2008 (three months ended December 31, 2007 -
$11,701) and $36,567 for nine months ended December 31, 2008 (nine months
ended December 31, 2007 - $11,701))
|
58,279 | 61,459 | 197,589 | 114,093 | ||||||||||||
Amortization
and depreciation
|
197,102 | 382,617 | 589,654 | 643,870 | ||||||||||||
INCOME
BEFORE OTHER INCOME (EXPENSES) AND INCOME TAXES
|
181,380 | (27,626 | ) | 487,259 | 52,798 | |||||||||||
Foreign exchange gain
(loss)
|
281,682 | 562 | 380,650 | (426,535 | ) | |||||||||||
Other income
|
10,833 | 9,084 | 29,808 | 28,626 | ||||||||||||
Gain on sale of
assets
|
- | - | 864 | 1,700 | ||||||||||||
Interest income
|
58,750 | 110,691 | 202,719 | 347,794 | ||||||||||||
Interest
expense
|
(45,269 | ) | (116,788 | ) | (204,154 | ) | (246,955 | ) | ||||||||
INCOME (LOSS)
BEFORE INCOME TAXES
|
487,376 | (24,077 | ) | 897,146 | (242,572 | ) | ||||||||||
Income taxes
|
206,074 | 203,972 | 597,018 | 414,865 | ||||||||||||
NET
INCOME (LOSS)
|
281,302 | (228,049 | ) | 300,128 | (657,437 | ) | ||||||||||
DEFICIT,
beginning of period
|
(34,187,796 | ) | (32,415,182 | ) | (34,206,622 | ) | (31,985,794 | ) | ||||||||
DEFICIT,
end of period
|
$ | (33,906,494 | ) | $ | (32,643,231 | ) | $ | (33,906,494 | ) | $ | (32,643,231 | ) | ||||
EARNINGS
(LOSS) PER SHARE, basic and diluted
|
$ | 0.01 | $ | (0.01 | ) | $ | 0.01 | $ | (0.03 | ) | ||||||
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
||||||||||||||||
Basic
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27,116,408 | 22,341,280 | 26,741,795 | 21,814,759 | ||||||||||||
Diluted
|
27,116,408 | 22,341,280 | 26,741,795 | 21,814,759 |
Three
Months Ended
December
31
|
Nine
Months Ended
December
31
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
income (loss)
|
$ | 281,302 | $ | (228,049 | ) | $ | 300,128 | $ | (657,437 | ) | ||||||
Unrealized
foreign exchange gain (loss) on translation of self- sustaining
operations
|
782 | (2,555 | ) | 14,332 | 26,232 | |||||||||||
Comprehensive
income (loss)
|
$ | 282,084 | $ | (230,604 | ) | $ | 314,460 | $ | (631,205 | ) | ||||||
Three
Months Ended
December
31
|
Nine
Months Ended
December
31
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Operating
Activities:
|
||||||||||||||||
Net
income (loss)
|
$ | 281,302 | $ | (228,049 | ) | $ | 300,128 | $ | (657,437 | ) | ||||||
Adjustments
to reconcile net income (loss) to net cash provided by (used in) operating
activities
|
||||||||||||||||
Amortization and
depreciation
|
197,102 | 382,617 | 589,654 | 643,870 | ||||||||||||
Gain on sale
of assets
|
- | - | (864 | ) | (1,700 | ) | ||||||||||
Stock-based
compensation
|
324,759 | 241,829 | 1,023,173 | 495,344 | ||||||||||||
Stock-based compensation –
future income taxes
|
- | - | - | 11,185 | ||||||||||||
Unrealized foreign exchange
(gain) loss
|
(302,231 | ) | 17,242 | (298,891 | ) | 355,118 | ||||||||||
Changes
in non-cash operating working capital
|
||||||||||||||||
Restricted
cash
|
- | - | 125,000 | - | ||||||||||||
Accounts
receivable
|
1,217 | 175,270 | 136,826 | (15,645 | ) | |||||||||||
Prepaid
expenses
|
(21,094 | ) | 14,862 | (31,127 | ) | 131,494 | ||||||||||
Other
assets
|
- | (263 | ) | - | (8,753 | ) | ||||||||||
Accounts
payable and accrued liabilities
|
31,649 | (264,932 | ) | (801,937 | ) | (625,169 | ) | |||||||||
Corporate
taxes payable
|
55,872 | 327,881 | (517,121 | ) | 454,799 | |||||||||||
Deferred
revenue
|
(348,875 | ) | (414,804 | ) | (1,108,374 | ) | (1,044,079 | ) | ||||||||
Net
cash provided by (used in) operating activities
|
219,701 | 251,653 | (583,533 | ) | (260,973 | ) | ||||||||||
Investing
Activities:
|
||||||||||||||||
Acquisition
of Beanstream, net of cash acquired
|
- | (3,403,680 | ) | - | (7,375,068 | ) | ||||||||||
Acquisition
of property and equipment
|
(16,744 | ) | (6,723 | ) | (106,147 | ) | (113,646 | ) | ||||||||
Proceeds
from disposal of equipment
|
- | - | 5,500 | 1,700 | ||||||||||||
Development
of patents
|
- | (2,066 | ) | (1,652 | ) | (10,004 | ) | |||||||||
Net
cash used in investing activities
|
(16,744 | ) | (3,412,469 | ) | (102,299 | ) | (7,497,018 | ) | ||||||||
Financing
Activities:
|
||||||||||||||||
Payments
on capital leases
|
(48,939 | ) | (91,509 | ) | (142,335 | ) | (268,583 | ) | ||||||||
Payment
on promissory notes
|
- | - | (2,843,974 | ) | - | |||||||||||
Share
capital financing costs
|
- | - | (3,537 | ) | - | |||||||||||
Proceeds
from exercise of stock options
|
- | - | - | 77,438 | ||||||||||||
Net
cash used in financing activities
|
(48,939 | ) | (91,509 | ) | (2,989,846 | ) | (191,145 | ) | ||||||||
Effects
of foreign exchange rate changes on cash and cash
equivalents
|
(54,565 | ) | (59,272 | ) | (39,236 | ) | 244,514 | |||||||||
INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS
|
99,453 | (3,311,597 | ) | (3,714,914 | ) | (7,704,622 | ) | |||||||||
Cash
and cash equivalents, beginning of period
|
5,935,401 | 5,769,983 | 9,749,768 | 10,163,008 | ||||||||||||
Cash
and cash equivalents, end of period
|
$ | 6,034,854 | $ | 2,458,386 | $ | 6,034,854 | $ | 2,458,386 | ||||||||
Supplemental
disclosure of cash flow information
|
||||||||||||||||
Interest
paid
|
$ | 4,581 | $ | 4,292 | $ | 411,171 | $ | 43,041 | ||||||||
Taxes
paid
|
$ | 201,476 | $ | 14,063 | $ | 1,173,893 | $ | 42,449 | ||||||||
Non-cash
investing and financing transactions not included in cash
flows:
|
||||||||||||||||
Issuance
of common shares pursuant to earn-out provision
|
$ | - | $ | - | $ | 1,971,125 | $ | - |
2.
|
Adoption
of New Accounting Policies
|
2.
|
Adoption
of New Accounting Policies
(continued)
|
3.
|
Recent
accounting pronouncements
|
a)
|
In
January 2009, the CICA issued CICA HB Section 1582, “Business
Combinations”. This Section, which replaces the former Section 1581,
“Business Combinations”, establishes standards for the accounting for a
business combination. It provides the Canadian equivalent to IFRS 3,
"Business Combinations".
|
3.
|
Recent
accounting pronouncements
(continued)
|
b)
|
In
January 2009, the CICA issued CICA HB Section 1601, “Consolidated
Financial Statements”. This section, which, together with new Section
1602, replaces the former Section 1600, “Consolidated Financial
Statements”, establishes standards for the preparation of consolidated
financial statements.
|
c)
|
In
January 2009, the CICA issued CICA HB Section 1602, “Non-controlling
interests”. This new Section establishes standards for accounting for a
non-controlling interest in a subsidiary in consolidated financial
statements subsequent to a business combination. It is equivalent to the
corresponding provisions of International Accounting Standard 27,
“Consolidated and Separate Financial
Statements”.
|
4.
|
Foreign
currency translation
|
5.
|
Financial
instruments
|
a)
|
The
Corporation classifies its cash and cash equivalents, funds held for
merchants and restricted cash as held-for-trading. Accounts receivable are
classified as loans and receivables. Accounts payable and accrued
liabilities, funds due to merchants, and promissory notes are classified
as other financial liabilities, all of which are measured at amortized
costs.
|
Carrying
Value
|
Fair
Value
|
||||||||
Held-for-Trading
|
$ | 8,825,452 | $ | 8,825,452 | |||||
Loans
and receivables
|
554,919 | 554,919 | |||||||
Held-to-maturity
|
- | - | |||||||
Available-for-sale
|
- | - | |||||||
Other
financial liabilities
|
6,091,164 | 6,091,164 |
b)
|
Restricted
cash
|
c)
|
Market
Risk
|
December
31, 2008
|
March
31, 2008
|
||||||||
Cash
and restricted cash
|
$ | 337,632 | $ | 145,968 | |||||
Accounts
receivable
|
297,597 | 156,871 | |||||||
Accounts
payable
|
199,863 | 380,326 | |||||||
Accrued
liabilities
|
506,015 | 517,338 | |||||||
Corporate
taxes payable
|
21,180 | 573,240 | |||||||
Promissory
notes
|
2,134,647 | 5,167,383 | |||||||
5.
|
Financial
instruments (continued)
|
|
d)
|
Credit
Risk
|
0-30
days
|
$ | 176,534 | |||
31-60
days
|
80,432 | ||||
61-90
days
|
78,220 | ||||
Over
90 days due *
|
219,733 | ||||
$ | 554,919 |
|
*
Included in this balance are $118,648 in sales tax receivables of which
$54,556 relates to amounts outstanding from the 2007 Texas sales tax audit
and $64,092 relate to amounts owed on Canadian goods and services tax
receivables. The Corporation believes all of these amounts are
collectible.
|
|
e)
|
Liquidity
Risk
|
·
|
funds
held in reserves calculated by applying contractually determined
percentages of the gross transaction volume for a hold-back period of up
to six months;
|
·
|
funds
from transaction payment processing which may be held for up to
approximately fifteen days, the actual number of days depends on the
contractual terms with each merchant;
and
|
·
|
funds
from payroll/pre-authorized debit services provided on behalf of
merchants, which may be held for up to approximately two
days.
|
7.
|
Goodwill
and Intangible Assets
|
|
On
June 30, 2008, additional contingent consideration became payable under
the Beanstream arrangement agreement. Pursuant to the agreement
and due to Beanstream meeting certain performance related criteria,
additional consideration from the Corporation became issuable equal in
value to CAD$2,000,000. The payment of this additional
consideration resulted in an increase in the purchase price, and goodwill
recorded.
|
Original
goodwill recognized on acquisition
|
$ | 15,903,077 | |||
Additional
contingent consideration (CAD $2,000,000)
|
1,971,125 | ||||
Goodwill
related to Beanstream acquisition on December 31, 2008
|
$ | 17,874,202 |
7.
|
Goodwill
and Intangible Assets
(continued)
|
8.
|
Stock-based
compensation
|
9.
|
Commitments
and Contingencies
|
9.
|
Commitments
and Contingencies (continued)
|
10.
|
Industry
and geographic segments
|
10.
|
Industry
and geographic segments (continued)
|
Three
Months Ended
|
TPP
|
IPL
|
CP/SL
|
Reconciling
|
Consolidated
|
||||||||||||||||
December
31, 2008
|
Canada
|
U.S.
|
U.S.
|
Items
|
Total
|
||||||||||||||||
Total
Revenue
|
$ | 1,948,747 | $ | 431,354 | $ | 657,140 | $ | - | $ | 3,037,241 | |||||||||||
Revenue:
major customers
|
585,500 | 305,556 | 337,490 | - | 1,228,546 | ||||||||||||||||
Cost
of revenue
|
1,090,901 | - | 432,056 | 37,464 | 1 | 1,560,421 | |||||||||||||||
General
and administrative
|
145,262 | 2,208 | 111,825 | 703,615 | 2 | 962,910 | |||||||||||||||
Sales
and marketing
|
70,928 | - | 5,456 | 765 | 1 | 77,149 | |||||||||||||||
Product
development and enhancement
|
46,046 | - | - | 12,233 | 1 | 58,279 | |||||||||||||||
Amortization
and depreciation
|
10,729 | 42,057 | 15,481 | 128,835 | 3 | 197,102 | |||||||||||||||
Income
(losses) before income taxes
|
698,119 | 398,738 | 82,409 | (691,890 | ) | 4 | 487,376 |
Three
Months Ended
|
TPP
|
IPL
|
CP/SL
|
Reconciling
|
Consolidated
|
||||||||||||||||
December
31, 2007
|
Canada
|
U.S.
|
U.S.
|
Items
|
Total
|
||||||||||||||||
Total
Revenue
|
$ | 1,984,025 | $ | 415,314 | $ | 998,471 | $ | - | $ | 3,397,810 | |||||||||||
Revenue:
major customers
|
588,807 | 305,556 | 602,312 | - | 1,496,675 | ||||||||||||||||
Cost
of revenue
|
1,079,666 | - | 426,387 | 11,158 | 1 | 1,517,211 | |||||||||||||||
General
and administrative
|
134,229 | 8,573 | 582,690 | 693,810 | 2 | 1,419,302 | |||||||||||||||
Sales
and marketing
|
36,915 | - | 6,469 | 1,463 | 1 | 44,847 | |||||||||||||||
Product
development and enhancement
|
49,758 | - | - | 11,701 | 1 | 61,459 | |||||||||||||||
Amortization and
depreciation
|
5,657 | 41,858 | 84,972 | 250,130 | 3 | 382,617 | |||||||||||||||
Income
(losses) before income taxes
|
805,888 | 375,765 | (104,925 | ) | (1,100,805 | ) | 4 | (24,077 | ) |
Nine
Months Ended
|
TPP
|
IPL
|
CP/SL
|
Reconciling
|
Consolidated
|
||||||||||||||||
December
31, 2008
|
Canada
|
U.S.
|
U.S.
|
Items
|
Total
|
||||||||||||||||
Total
Revenue
|
$ | 5,873,518 | $ | 1,271,948 | $ | 2,156,221 | $ | - | $ | 9,301,687 | |||||||||||
Revenue:
major customers
|
1,717,463 | 916,668 | 1,054,354 | - | 3,688,485 | ||||||||||||||||
Cost
of revenue
|
3,223,944 | - | 1,241,436 | 113,065 | 1 | 4,578,445 | |||||||||||||||
General
and administrative
|
457,461 | 14,378 | 467,197 | 2,271,989 | 2 | 3,211,025 | |||||||||||||||
Sales
and marketing
|
216,393 | - | 19,036 | 2,286 | 1 | 237,715 | |||||||||||||||
Product
development and enhancement
|
161,023 | - | - | 36,566 | 1 | 197,589 | |||||||||||||||
Amortization
and depreciation
|
31,617 | 126,143 | 48,378 | 383,516 | 3 | 589,654 | |||||||||||||||
Income
(losses) before income taxes
|
1,937,396 | 1,165,728 | 361,073 | (2,567,051 | ) | 4 | 897,146 |
Nine
Months Ended
|
TPP
|
IPL
|
CP/SL
|
Reconciling
|
Consolidated
|
|||||||||||||||||
December
31, 2007
|
Canada
|
U.S.
|
U.S.
|
Items
|
Total
|
|||||||||||||||||
Total
Revenue
|
$ | 3,693,900 | $ | 1,259,669 | $ | 3,082,505 | $ | - | $ | 8,036,074 | ||||||||||||
Revenue:
major customers
|
1,109,371 | 916,668 | 1,738,928 | - | 3,764,967 | |||||||||||||||||
Cost
of revenue
|
1,937,585 | - | 1,359,347 | 30,655 | 1 | 3,327,587 | ||||||||||||||||
General
and administrative
|
231,183 | 12,728 | 1,742,034 | 1,750,242 | 2 | 3,736,187 | ||||||||||||||||
Sales
and marketing
|
87,591 | - | 72,485 | 1,463 | 1 | 161,539 | ||||||||||||||||
Product
development and enhancement
|
102,392 | - | - | 11,701 | 1 | 114,093 | ||||||||||||||||
Amortization and
depreciation
|
10,975 | 125,183 | 253,473 | 254,239 | 3 | 643,870 | ||||||||||||||||
Income
(losses) before income taxes
|
1,478,916 | 1,239,418 | (345,128 | ) | (2,615,778 | ) | 4 | (242,572 | ) |
1
|
Represents
stock-based compensation expense.
|
2
|
Represents
stock-based compensation expense and other unallocated corporate or
centralized marketing, general and administrative
expenses.
|
3
|
Represents
amortization and depreciation included in the unallocated corporate or
centralized marketing, general and administrative
expenses.
|
4
|
Represents
income (losses) included in the unallocated corporate or centralized
marketing, general and administrative
expenses.
|
11.
|
Reconciliation
of United States to Canadian Generally Accepted Accounting
Principles
|
a)
|
Under
U.S. GAAP, the Corporation could not effect the 2001 reduction in deficit
of $22,901,744 by reducing the stated capital of the shares of the
Corporation's common stock.
|
b)
|
Income
Taxes
|
c)
|
Changes
in U.S. GAAP
|
(i)
|
In September 2006,
the FASB issued SFAS No. 157, “Fair Value Measurements”, which
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about
fair value measurements. SFAS 157 is effective for fiscal years
beginning after November 15, 2007 except as amended by FASB Staff Position
(“FSP”) SFAS 157-2 which is effective for fiscal years beginning after
November 15, 2008. FSP SFAS 157-2 allows partial deferral of the effective
date of SFAS 157 relating to fair value measurements for non-financial
assets and liabilities that are not measured at fair value on a recurring
basis. SFAS
No. 157 does not require any new fair value measurements, but
provides guidance on how to measure fair value by providing a fair value
hierarchy used to classify the source of the information. As of
April 1, 2008, the Corporation adopted SFAS 157, except as it
applies to the non-financial assets and non-financial liabilities subject
to FSP SFAS 157-2. The Corporation will adopt the remaining portion of
SFAS 157 in the first quarter of fiscal 2010 and does not expect the
adoption to have a material impact on the consolidated financial
statements and the accompanying
notes.
|
(ii)
|
As
at April 1, 2008, the Corporation adopted SFAS No. 159, “The Fair
Value Option for Financial Assets and Financial Liabilities”. SFAS
No. 159 provides companies with an option to report selected
financial assets and liabilities at fair value. The objective of SFAS
No. 159 is to reduce both complexity in accounting for financial
instruments and the volatility in earnings caused by measuring related
assets and liabilities differently. U.S. GAAP has required different
measurement attributes for different assets and liabilities that can
create artificial volatility in earnings. FASB has indicated it believes
that SFAS No. 159 helps to mitigate this type of accounting- induced
volatility by enabling companies to report related assets and liabilities
at fair value, which would likely reduce the need for companies to comply
with detailed rules for hedge accounting. SFAS No. 159 also
establishes presentation and disclosure requirements designed to
facilitate comparisons between companies that choose different measurement
attributes for similar types of assets and liabilities. For example, SFAS
No. 159 requires companies to provide additional information that
will help investors and other users of financial statements to more easily
understand the effect of the company’s choice to use fair value on its
earnings. It also requires entities to display the fair value of those
assets and liabilities for which the company has chosen to use fair value
on the face of the balance sheet. SFAS No. 159 does not eliminate
disclosure requirements included in other accounting standards, including
requirements for disclosures about fair value measurements included in
SFAS No. 157, , and SFAS No. 107, “Disclosures about Fair Value
of Financial Instruments”. The Corporation did
not elect to use the fair value measurement options of this
standard. Adoption of this standard has not had a
significant impact on the Corporation’s consolidated financial
statements.
|
11.
|
Reconciliation
of United States to Canadian Generally Accepted Accounting Principles
(continued)
|
(iii)
|
In
December 2007, the FASB issued SFAS No. 141(R) “Business
Combinations”. SFAS No. 141(R) replaces SFAS No. 141 “Business
Combinations”. SFAS No. 141(R) is broader in scope than SFAS No.
141 which applied only to business combinations in which control was
obtained by transferring consideration. SFAS No. 141(R) applies to all
transactions and other events in which one entity obtains control over one
or more other businesses. SFAS No. 141(R) is effective for fiscal years
beginning after December 15, 2008 and the Corporation will adopt the
standard in the first quarter of fiscal 2010 and its effects on future
periods will depend on the nature and significance of any business
combinations subject to this
statement.
|
(iv)
|
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest
in Consolidated Financial Statements”, an amendment of
ARB No. 51. The new statement changes the accounting for, and
the financial statement presentation of, noncontrolling equity interests
in a consolidated subsidiary.
|
(v)
|
In
March 2008, the FASB issued SFAS No. 161 "Disclosures about Derivative
Instruments and Hedging Activities - an amendment of FASB Statement No.
133". This standard requires enhanced disclosures regarding derivatives
and hedging activities, including: (a) the manner in which an entity uses
derivative instruments; (b) the manner in which derivative instruments and
related hedged items are accounted for under SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities;" and (c) the effect of
derivative instruments and related hedged items on an entity's financial
position, financial performance, and cash flows. SFAS No. 161 is effective
for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008. The Corporation is in the process of
evaluating the impact, if any, that the adoption of SFAS No. 161 will have
on its consolidated financial
statements.
|
Exhibit
Number
|
Description
of Document
|
|
3.1
|
Restated
Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the
Annual Report on Form 10-K for the period ended March 31, 2006 of LML
(File No. 0-13959)).
|
|
3.2
|
Bylaws
of LML, as amended (incorporated by reference to Exhibit 3.2 to the
Quarterly Report on Form 10-Q for the period ended September 30, 2007 of
LML (File No. 0-13959)).
|
|
31.1*
|
Rule
13a-14(a) Certification of Principal Executive Officer.
|
|
31.2*
|
Rule
13a-14(a) Certification of Principal Financial Officer.
|
|
32*
|
Section
1350 Certification of Principal Executive Officer and Principal Financial
Officer.
|
LML
PAYMENT SYSTEMS INC.
|
|
/s/
Richard R. Schulz
|
|
Richard
R. Schulz
|
|
Controller
and Chief Accounting Officer
|
|
(Duly
Authorized Officer and Chief Accounting Officer)
|
|
February
9, 2009
|