SAN ANTONIO, Nov. 14, 2016 (GLOBE NEWSWIRE) -- Payment Data Systems, Inc. (NASDAQ:PYDS), an integrated payment solutions provider, today
announced financial results for the third quarter ended September 30, 2016.
Third Quarter 2016 Financial and Operating Summary
- Revenues were $3.1 million
- Gross margin was $965,485, or 31% of revenues
- Operating loss was $574,897
- Adjusted EBITDA loss1 was $129,859
- Net loss was $565,957, or $0.07 per share
- Total dollars processed for the third quarter of 2016 exceeded $759 million, compared to $865 million in the third quarter of
2015
- Third quarter credit card transaction processing volume decreased 2% and credit card dollars processed decreased 9% compared
with the same period in 2015
- ACH (Electronic check) transaction volumes decreased 15%; returned check transactions processed decreased 24% compared to the
third quarter of 2015
1See Reconciliation of GAAP Operating Income to Adjusted EBITDA in the accompanying financial tables
Management Commentary
“Overall transaction volumes and dollars processes increased in the third quarter compared to the previous quarter,
driving sequential growth in revenues and gross margin,” said Louis Hoch, President and CEO, Payment Data Systems, Inc.
“Given the year-over-year decline in ACH transaction volumes that we have experienced this year, we accelerated our marketing and
promotional strategies during the third quarter and are pleased to see these efforts paying off. We are continuing to build
solid traction through product innovations that support and enhance customer operations, such as the use of our prepaid card
technology to support real-time provisioning to mobile wallets like Apple Pay® and instantaneous issuance and delivery
of gift and incentive cards. Our new PIN-less debit product, that allows merchants to debit and credit accounts in real-time,
was rolled out in October and we are very pleased with the traction we are receiving. We expect it to become a significant
offering for our Company.”
Financial Results
Three Months Ended September 30, 2016
Revenues of $3.1 million decreased 14% compared to $3.6 million for the third quarter of 2015, due to a decrease in
the volume of ACH transactions and returned checks processed.
Gross margin was $965,485, or 31% of revenues, compared to $1.2 million, or 34% of revenues, in the corresponding
prior-year period.
Operating loss was $574,897, compared to operating income of $23,332 in the third quarter a year ago, reflecting
higher selling, general and administrative expenses to support the Company’s growth, as well as higher amortization expense related
to the assets acquired from Akimbo in December 2014.
Adjusted EBITDA loss was $129,859 compared to adjusted EBITDA of $589,161 in the corresponding prior-year
period. Please see a reconciliation of Adjusted EBITDA loss to operating income in the accompanying financial tables.
Net loss was $565,957, or $0.07 per share, compared to net income of $117,780, or $0.01 per diluted share in the
third quarter of 2015.
Balance Sheet
At September 30, 2016, the Company had $4.3 million of cash and cash equivalents.
About Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, EBITDA and adjusted EBITDA, as defined in Regulation G of
the Securities and Exchange Act of 1934, as amended. The Company reports its financial results in compliance with GAAP, but
believes that also discussing non-GAAP measures provides investors with financial measures it uses in the management of its
business. The Company defines EBITDA as operating income (loss), before interest, taxes, depreciation and amortization of
intangibles. The Company defines adjusted EBITDA as EBITDA, as defined above, plus non-cash stock option costs and certain
non-recurring items, such as acquisitions. These measures may not be comparable to similarly titled measures reported by other
companies. Management uses EBITDA and adjusted EBITDA as indicators of the Company's operating performance and ability to fund
acquisitions, capital expenditures and other investments and, in the absence of refinancing options, to repay debt obligations.
Management believes EBITDA and adjusted EBITDA are helpful to investors in evaluating the Company's operating
performance because non-cash costs and other items that management believes are not indicative of its results of operations are
excluded. EBITDA and adjusted EBITDA are supplemental non-GAAP measures, which have limitations as an analytical tool. Non-GAAP
financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in
accordance with GAAP. Non-GAAP financial measures do not reflect a comprehensive system of accounting, may differ from GAAP
measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other
companies. For a description of our use of EBITDA and adjusted EBITDA, and a reconciliation of EBITDA and adjusted EBITDA to
operating income (loss), see the section of this press release titled "Non-GAAP Reconciliation."
Conference Call and Webcast
Payment Data Systems, Inc.’s management will host a conference call with a live webcast today at 5:00 p.m. Eastern
Time to provide a business update.
Individuals interested in dialing in to the conference call may do so by dialing (844) 883-3890 for U.S.
participants or (412) 317-9246 for participants outside of the U.S., referencing “Payment Data Systems” to the operator. If
you would like to submit a question via email in advance please contact Kristen Papke at kpapke@finprofiles.com.
A replay of the call will be available through Monday, November 28, 2016 by dialing (877) 344-7529 (U.S.) or (412)
317-0088 (international), using the passcode 10094994.
About Payment Data Systems, Inc.
Payment Data Systems (NASDAQ:PYDS), a leading integrated payment solutions provider, offers a wide range of payment
solutions to merchants, billers, banks, service bureaus, and card issuers. The Company operates credit, debit/prepaid and ACH
payment processing platforms to deliver convenient, world-class payment solutions and service to their clients. The strength of the
Company lies in its ability to provide tailored solutions for card issuance, payment acceptance, and bill payments as well as its
unique technology in the prepaid sector. Payment Data is headquartered in San Antonio, Texas, and has offices in New
York, New York; and Long Beach, California.
For additional information please visit www.paymentdata.com. Websites: www.akimbocard.com and www.ficentive.com. Find us on Facebook®.
FORWARD-LOOKING STATEMENTS DISCLAIMER
Except for the historical information contained herein, the matters discussed in this release include certain
forward-looking statements, which are intended to be covered by safe harbors. Those statements include, but may not be limited to,
all statements regarding our management’s intent, belief and expectations, such as statements concerning our future and our
operating and growth strategy. Investors are cautioned that all forward-looking statements involve risks and uncertainties
including, without limitation, the factors detailed from time to time in our filings with the Securities and Exchange Commission.
One or more of these factors have affected, and in the future could affect our businesses and financial results in the future and
could cause actual results to differ materially from plans and projections. We believe that the assumptions underlying the
forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent
in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by
us or any other person that our objectives and plans will be achieved. All forward-looking statements made in this release are
based on information presently available to our management. We assume no obligation to update any forward-looking statements,
except as required by law.
(Financial Tables Follow)
| PAYMENT DATA SYSTEMS, INC. |
| CONDENSED CONSOLIDATED BALANCE
SHEETS |
| |
| |
|
September 30, 2016 |
|
December 31, 2015 |
| |
|
(Unaudited) |
|
|
| Assets |
|
|
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
4,293,590 |
|
|
$ |
4,059,606 |
|
| Accounts receivable, net |
|
|
1,001,206 |
|
|
|
1,135,384 |
|
| Settlement processing assets |
|
|
41,115,815 |
|
|
|
39,797,232 |
|
| Prepaid expenses and other |
|
|
178,944 |
|
|
|
149,118 |
|
| Current assets before restricted cash |
|
|
46,589,555 |
|
|
|
45,141,340 |
|
| Restricted cash |
|
|
18,110,544 |
|
|
|
17,972,065 |
|
| Total current assets |
|
|
64,700,099 |
|
|
|
63,113,405 |
|
| |
|
|
|
|
|
|
|
|
| Property and equipment, net |
|
|
2,675,836 |
|
|
|
3,077,421 |
|
| |
|
|
|
|
|
|
|
|
| Other assets: |
|
|
|
|
|
|
|
|
| Intangibles, net |
|
|
213,682 |
|
|
|
341,816 |
|
| Deferred tax asset |
|
|
1,621,000 |
|
|
|
1,621,000 |
|
| Note receivable |
|
|
200,000 |
|
|
|
- |
|
| Other assets |
|
|
199,746 |
|
|
|
202,849 |
|
| Total other assets |
|
|
2,234,428 |
|
|
|
2,165,665 |
|
| |
|
|
|
|
|
|
|
|
| Total assets |
|
$ |
69,610,363 |
|
|
$ |
68,356,491 |
|
| |
|
|
|
|
|
|
|
|
| Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
166,959 |
|
|
$ |
143,180 |
|
| Accrued expenses |
|
|
810,799 |
|
|
|
1,328,738 |
|
| Settlement processing obligations |
|
|
41,115,815 |
|
|
|
39,797,232 |
|
| Current liabilities before restricted cash |
|
|
42,093,573 |
|
|
|
41,269,150 |
|
| Restricted cash |
|
|
18,110,544 |
|
|
|
17,972,065 |
|
| Total current liabilities |
|
|
60,204,117 |
|
|
|
59,241,215 |
|
| |
|
|
|
|
|
|
|
|
| Stockholders’ equity: |
|
|
|
|
|
|
|
|
| Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at
September 30, 2016 (unaudited) and December 31, 2015 |
|
|
- |
|
|
|
- |
|
| Common stock, $0.001 par value, 200,000,000 shares authorized; 12,592,591 and 12,379,537
issued, and 12,242,959 and 12,029,905 outstanding at September 30, 2016 (unaudited) and December 31, 2015, respectively |
|
|
185,751 |
|
|
|
185,533 |
|
| Additional paid-in capital |
|
|
64,859,920 |
|
|
|
64,302,498 |
|
| Treasury stock, at cost; 349,632 and 349,632 shares |
|
|
(286,393 |
) |
|
|
(286,394 |
) |
| Deferred compensation |
|
|
(5,344,769 |
) |
|
|
(6,031,362 |
) |
| Accumulated deficit |
|
|
(50,008,263 |
) |
|
|
(49,054,999 |
) |
| Total stockholders’ equity |
|
|
9,406,246 |
|
|
|
9,115,276 |
|
| |
|
|
|
|
|
|
|
|
| Total liabilities and stockholders’ equity |
|
$ |
69,610,363 |
|
|
$ |
68,356,491 |
|
| |
|
|
|
|
|
|
|
|
| See notes to interim consolidated financial statements. |
| |
| PAYMENT DATA SYSTEMS, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
| (UNAUDITED) |
| |
| |
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
| |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
| |
|
|
|
|
|
|
|
|
| Revenues |
|
$ |
3,067,335 |
|
|
$ |
3,550,463 |
|
|
$ |
9,186,027 |
|
|
$ |
10,717,679 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of services |
|
|
2,101,850 |
|
|
|
2,336,270 |
|
|
|
6,291,072 |
|
|
|
7,138,450 |
|
| Selling, general and administrative: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stock-based compensation |
|
|
264,154 |
|
|
|
338,488 |
|
|
|
835,590 |
|
|
|
965,544 |
|
| Cancellation of stock-based compensation |
|
|
(44,875 |
) |
|
|
- |
|
|
|
(44,875 |
) |
|
|
(163,936 |
) |
| Other expenses |
|
|
1,095,344 |
|
|
|
758,573 |
|
|
|
2,505,233 |
|
|
|
1,695,415 |
|
| Depreciation and amortization |
|
|
225,759 |
|
|
|
93,800 |
|
|
|
675,536 |
|
|
|
272,320 |
|
| Total operating expenses |
|
|
3,642,232 |
|
|
|
3,527,131 |
|
|
|
10,262,556 |
|
|
|
9,907,793 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income (loss) |
|
|
(574,897 |
) |
|
|
23,332 |
|
|
|
(1,076,530 |
) |
|
|
809,886 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income and (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest income |
|
|
25,754 |
|
|
|
20,097 |
|
|
|
72,739 |
|
|
|
58,455 |
|
| Other income (expense) |
|
|
(480 |
) |
|
|
90,600 |
|
|
|
97,199 |
|
|
|
58,190 |
|
| Total other income and (expense), net |
|
|
25,274 |
|
|
|
110,697 |
|
|
|
169,938 |
|
|
|
116,645 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) before income taxes |
|
|
(549,623 |
) |
|
|
134,029 |
|
|
|
(906,592 |
) |
|
|
926,531 |
|
| Income taxes |
|
|
16,334 |
|
|
|
16,249 |
|
|
|
46,668 |
|
|
|
75,285 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(565,957 |
) |
|
$ |
117,780 |
|
|
$ |
(953,259 |
) |
|
$ |
851,246 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings per common share: |
|
$ |
(0.07 |
) |
|
$ |
0.02 |
|
|
$ |
(0.12 |
) |
|
$ |
0.12 |
|
| Diluted earnings per common share: |
|
$ |
(0.07 |
) |
|
$ |
0.01 |
|
|
$ |
(0.12 |
) |
|
$ |
0.07 |
|
| Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
7,819,608 |
|
|
|
7,373,656 |
|
|
|
7,759,205 |
|
|
|
7,373,656 |
|
| Diluted |
|
|
7,819,608 |
|
|
|
12,057,255 |
|
|
|
7,759,205 |
|
|
|
12,057,255 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| See notes to interim consolidated financial
statements. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| PAYMENT DATA SYSTEMS, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
| (UNAUDITED) |
| |
| |
|
Nine months Ended September
30, |
| |
|
2016 |
|
2015 |
| |
|
|
|
|
|
|
|
|
| Operating activities: |
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(953,259 |
) |
|
$ |
851,246 |
|
| Adjustments to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
| Depreciation |
|
|
553,182 |
|
|
|
242,558 |
|
| Amortization |
|
|
122,354 |
|
|
|
29,762 |
|
| Non-cash stock based compensation |
|
|
835,590 |
|
|
|
965,544 |
|
| Cancellation of stock based compensation |
|
|
(44,875 |
) |
|
|
(163,936 |
) |
| Issuance of stock to consultant |
|
|
34,300 |
|
|
|
- |
|
| Changes in current assets and current liabilities: |
|
|
|
|
|
|
|
|
| Accounts receivable |
|
|
134,178 |
|
|
|
155,803 |
|
| Prepaid expenses and other |
|
|
(29,826 |
) |
|
|
(26,663 |
) |
| Other assets |
|
|
3,103 |
|
|
|
28,563 |
|
| Accounts payable and accrued expenses |
|
|
(69,166 |
) |
|
|
(361,231 |
) |
| Deferred revenue |
|
|
- |
|
|
|
- |
|
| Settlement processing assets, net |
|
|
- |
|
|
|
- |
|
| Net cash provided by operating activities: |
|
|
585,581 |
|
|
|
1,721,646 |
|
| |
|
|
|
|
|
|
|
|
| Investing activities: |
|
|
|
|
|
|
|
|
| Purchases of property and equipment |
|
|
(151,597 |
) |
|
|
(726,476 |
) |
| Note receivable |
|
|
(200,000 |
) |
|
|
- |
|
| Net cash (used) by investing activities: |
|
|
(351,597 |
) |
|
|
(726,476 |
) |
| |
|
|
|
|
|
|
|
|
| Financing activities: |
|
|
|
|
|
|
|
|
| Purchase of treasury stock |
|
|
- |
|
|
|
(26,541 |
) |
| Net cash (used) by financing activities: |
|
|
- |
|
|
|
(26,541 |
) |
| |
|
|
|
|
|
|
|
|
| Change in cash and cash equivalents |
|
|
233,984 |
|
|
|
968,629 |
|
| Cash and cash equivalents, beginning of period |
|
|
4,059,606 |
|
|
|
2,803,455 |
|
| |
|
|
|
|
|
|
|
|
| Cash and cash equivalents, end of period |
|
$ |
4,293,590 |
|
|
$ |
3,772,084 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
| Cash paid during the period for: |
|
|
|
|
|
|
|
|
| Interest |
|
|
- |
|
|
|
- |
|
| Income taxes |
|
$ |
- |
|
|
|
77,369 |
|
| |
|
|
|
|
|
|
|
|
| See notes to interim consolidated financial statements. |
| |
|
|
|
|
|
|
|
|
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES |
| (IN THOUSANDS) |
| (UNAUDITED) |
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
| |
|
|
|
|
|
|
|
|
| In thousands |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
| |
|
|
|
|
|
|
|
|
| Reconciliation from Operating Income to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
| Operating income |
|
$ |
(574,897 |
) |
|
$ |
23,332 |
|
|
$ |
(1,076,532 |
) |
|
$ |
809,886 |
|
| Depreciation and amortization |
|
|
225,759 |
|
|
$ |
93,800 |
|
|
|
675,536 |
|
|
|
272,320 |
|
| EBITDA |
|
|
(349,138 |
) |
|
|
117,132 |
|
|
|
(400,996 |
) |
|
|
1,082,206 |
|
| |
|
|
|
|
|
|
|
|
| Expenses related to NASDAQ uplisting and reverse stock split |
|
|
- |
|
|
|
133,541 |
|
|
|
- |
|
|
|
315,903 |
|
| Acquisition costs |
|
|
- |
|
|
|
- |
|
|
|
|
|
20,000 |
|
| Non-cash stock compensation expense (net) |
|
|
219,279 |
|
|
|
338,488 |
|
|
|
790,715 |
|
|
|
801,608 |
|
| Adjusted EBITDA |
|
$ |
(129,859 |
) |
|
$ |
589,161 |
|
|
$ |
389,719 |
|
|
$ |
2,219,717 |
|
| |
|
|
|
|
|
|
|
|
| Calculation of Adjusted EBITDA margins: |
|
|
|
|
|
|
|
|
| Revenues |
|
$ |
3,067,335 |
|
|
$ |
3,550,463 |
|
|
$ |
9,186,026 |
|
|
$ |
10,717,679 |
|
| Adjusted EBITDA |
|
$ |
(129,859 |
) |
|
$ |
589,161 |
|
|
$ |
389,719 |
|
|
$ |
2,219,717 |
|
| Adjusted EBITDA margins |
|
|
-4.2 |
% |
|
|
16.6 |
% |
|
|
4.2 |
% |
|
|
20.7 |
% |
| |
|
|
|
|
|
|
|
|
Investor Contacts: Kristen Papke Financial Profiles ir@paymentdata.com
