Exhibit 99.1
Aug. 15, 2013 20:01 UTC
3PEA International, Inc. Reports Second Quarter Earnings
HENDERSON, Nev.-- 3PEA International, Inc. (OTCBB:TPNL), a payments solution company focused on prepaid debit card processing and program management, today announced financial results for the quarter ended June 30, 2013.
Results of Operations
Three Months ended June 30, 2013 and 2012
Revenues for the three months ended June 30, 2013 were $1,204,386, a decrease of $1,344,617 compared to the same period in the prior year, when revenues were $2,549,003. The decrease in revenue is primarily due to the timing of implementation and utilization of our pharmaceutical card programs, which makes up the majority of our revenues. We expect our revenues to trend upward as the economy continues to improve and as we roll out additional debit card programs utilizing our PaySign® processing platform, diversify our product line and increase the number of support services offered to our customers.
Cost of revenues for the three months ended June 30, 2013 were $799,559, a decrease of $1,233,705 compared to the same period in the prior year, when cost of revenues were $2,033,264. Cost of revenues constituted approximately 66% and 80% of total revenues in 2013 and 2012, respectively.
Gross profit for the three months ended June 30, 2013 was $404,827, a decrease of $110,912 compared to the same period in the prior year, when gross profit was $515,739. Our overall gross profit percentage approximated 34% and 20% during the fiscal years 2013 and 2012. The increase in our gross profit percentage can be attributed to a relative increase in higher margin revenue sources.
Selling, general and administrative expenses for the three months ended June 30, 2013 were $300,205, an increase of $156,210 compared to the same period in the prior year, when selling, general and administrative expenses were $143,995. The increase is primarily due to additional costs incurred related to our card program management and customer call center, which was launched during the first quarter of 2013. The increase is consistent with our overall expectations.
Other income (expense) for the three months ended June 30, 2013 was $(14,944), a decrease in net other income (expense) of $1,135,293 compared to the same period in the prior year when other income (expense) was $1,120,349. The overall decrease in net other income (expense) in 2012 is primarily due to gain on debt extinguishments of $1,136,055 in the prior year which is considered a non-recurring transaction.
Our net income for the three months ended June 30, 2013 was $79,839, a decrease of $1,400,981 compared to the same period in the prior year, when we recorded net income of $1,480,820. The decrease in our net income is attributable to the gain on debt extinguishments of $1,136,055 in the prior year, which is considered a non-recurring transaction, and the increase in selling, general and administrative costs related to our in-house call center.
“We are pleased with this quarter’s financial performance despite the impact on our revenues due to the cyclical nature of our card programs,” said Arthur De Joya, Chief Financial Officer of 3PEA International.
3PEA INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2013 AND DECEMBER 31, 2012
(UNAUDITED)
| | | June 30, 2013 | | | December 31, 2012 | |
| ASSETS | | | | | | | | |
| Current assets | | | | | | | | |
| Cash | | $ | 865,635 | | | $ | 1,872,911 | |
| Cash Restricted | | | 5,006,285 | | | | 5,050,867 | |
| Accounts Receivable | | | 118,189 | | | | 81,333 | |
| Prepaid Expenses and other assets | | | 81,838 | | | | 16,050 | |
| Total current assets | | | 6,071,947 | | | | 7,021,161 | |
| Fixed assets, net | | | 110,068 | | | | 108,938 | |
| Intangible and other assets | | | | | | | | |
| Deposits | | | 4,896 | | | | 3,551 | |
| Intangible assets, net | | | 416,134 | | | | 326,625 | |
| Total assets | | $ | 6,603,045 | | | $ | 7,460,275 | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | | | | | |
| Current liabilities | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 1,086,989 | | | $ | 2,212,312 | |
| Customer card funding | | | 5,006,285 | | | | 5,050,867 | |
| Notes payable-related parties | | | 538,000 | | | | 538,000 | |
| Notes payable | | | 169,400 | | | | 169,400 | |
| Total current liabilities | | | 6,800,674 | | | | 7,970,579 | |
| Total liabilities | | | 6,800,674 | | | | 7,970,579 | |
| Stockholders' deficit | | | | | | | | |
Common stock; $0.001 par value; 150,000,000 shares authorized,
38,936,106 and 38,911,606 issued and outstanding
at June 30, 2013 and December 31, 2012, respectively | | | 38,936 | | | | 38,912 | |
| Additional paid-in capital | | | 5,570,406 | | | | 5,563,931 | |
| Treasury stock at cost, 303,450 shares | | | (150,000 | ) | | | (150,000 | ) |
| Accumulated deficit | | | (5,706,000 | ) | | | (6,012,243 | ) |
| Total 3PEA International, Inc.'s stockholders' deficit | | | (246,658 | ) | | | (559,400 | ) |
| Noncontrolling interest | | | 49,029 | | | | 49,096 | |
| Total stockholders' deficit | | | (197,629 | ) | | | (510,304 | ) |
| Total liabilities and stockholders' deficit | | $ | 6,603,045 | | | $ | 7,460,275 | |
3PEA INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2013 AND 2012
(UNAUDITED)
| | | For the three months ended June 30, | |
| | | 2013 | | | 2012 | |
| Revenues | | $ | 1,204,386 | | | $ | 2,549,003 | |
| Cost of revenues | | | 799,559 | | | | 2,033,264 | |
| Gross profit | | | 404,827 | | | | 515,739 | |
| Operating expenses | | | | | | | | |
| Depreciation and amortization | | | 9,899 | | | | 11,276 | |
| Selling, general and administrative | | | 300,205 | | | | 143,995 | |
| Total operating expenses | | | 310,104 | | | | 155,271 | |
| Income from operations | | | 94,723 | | | | 360,468 | |
Other income (expense)
Interest expense | | | (14,944 | ) | | | (15,706 | ) |
| Gain on debt extinguishment | | | – | | | | 1,136,055 | |
| Total other income (expense) | | | (14,944 | ) | | | 1,120,349 | |
| Income before provision for income taxes and noncontrolling interest | | | 79,779 | | | | 1,480,817 | |
| Provision for income taxes | | | – | | | | – | |
| Net income before noncontrolling interest | | | 79,779 | | | | 1,480,817 | |
| Net (income) loss attributable to the noncontrolling interest | | | (60 | ) | | | (3 | ) |
| Net income attributable to 3PEA International, Inc. | | $ | 79,839 | | | $ | 1,480,820 | |
| Net income per common share - basic | | | 0.00 | | | | 0.04 | |
| Net income per common share - fully diluted | | | 0.00 | | | | 0.04 | |
| Weighted average common shares outstanding - basic | | | 38,932,324 | | | | 36,789,853 | |
| Weighted average common shares outstanding - fully diluted | | | 43,267,824 | | | | 38,329,314 | |
3PEA INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND 2012
(UNAUDITED)
| | For the six months ended June 30, | |
| | | 2013 | | | 2012 | |
| Revenues | | $ | 3,315,423 | | | $ | 4,033,595 | |
| Cost of revenues | | | 2,391,030 | | | | 3,255,069 | |
| Gross profit | | | 924,393 | | | | 778,526 | |
| Operating expenses | | | | | | | | |
| Depreciation and amortization | | | 20,080 | | | | 28,874 | |
| Selling, general and administrative | | | 568,810 | | | | 297,096 | |
| Total operating expenses | | | 588,890 | | | | 325,970 | |
| Income from operations | | | 335,503 | | | | 452,556 | |
Other income (expense)
Interest expense | | | (29,327 | ) | | | (31,459 | ) |
| Gain on debt extinguishment | | | – | | | | 1,136,055 | |
| Total other income (expense) | | | (29,327 | ) | | | 1,104,596 | |
| Income before provision for income taxes and noncontrolling interest | | | 306,176 | | | | 1,557,152 | |
| Provision for income taxes | | | – | | | | – | |
| Net income before noncontrolling interest | | | 306,176 | | | | 1,557,152 | |
| Net (income) loss attributable to the noncontrolling interest | | | (67 | ) | | | (8 | ) |
| Net income attributable to 3PEA International, Inc. | | $ | 306,243 | | | $ | 1,557,160 | |
| Net income per common share - basic | | | 0.01 | | | | 0.04 | |
| Net income per common share - fully diluted | | | 0.01 | | | | 0.04 | |
| Weighted average common shares outstanding - basic | | | 38,932,324 | | | | 36,038,449 | |
| Weighted average common shares outstanding - fully diluted | | | 43,267,824 | | | | 36,826,506 | |
3PEA INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND 2012
(UNAUDITED)
| | For the six months ended June 30, | |
| | | 2013 | | | 2012 | |
| Cash flows from operating activities: | | | | | | | | |
| Net income | | $ | 306,243 | | | $ | 1,557,160 | |
Adjustments to reconcile net income to net
cash provided by (used in) operating activities: | | | | | | | | |
| Change in noncontrolling interest | | | (67 | ) | | | 8 | |
| Depreciation and amortization | | | 20,080 | | | | 28,874 | |
| Stock based compensation | | | 83,252 | | | | – | |
| Gain on extinguishment of debt-stock based | | | – | | | | (1,136,055 | ) |
| Changes in operating assets and liabilities: | | | | | | | | |
| Change in restricted cash | | | 44,582 | | | | (64,577 | ) |
| Change in prepaid expenses and other assets | | | (69,632 | ) | | | (155 | ) |
| Change in accounts receivable | | | (36,856 | ) | | | (856,857 | ) |
| Change in accounts payable and accrued liabilities | | | (1,199,577 | ) | | | 577,678 | |
| Change in customer card funding | | | (44,582 | ) | | | 64,577 | |
| Net cash provided by (used in) operating activities | | | (896,557 | ) | | | 170,653 | |
| Cash flows from investing activities: | | | | | | | | |
| Purchase of fixed assets | | | (19,672 | ) | | | (25,350 | ) |
| Purchase of intangible assets | | | (91,047 | ) | | | (79,758 | ) |
| Net cash used by investing activities | | | (110,719 | ) | | | (105,108 | ) |
| Cash flows from financing activities: | | | | | | | | |
| Payments on notes payable | | | – | | | | (11,750 | ) |
| Net cash used by financing activities | | | – | | | | (11,750 | ) |
| Net change in cash | | | (1,007,276 | ) | | | 53,795 | |
| Cash, beginning of period | | | 1,872,911 | | | | 63,826 | |
| Cash, end of period | | $ | 865,635 | | | $ | 117,621 | |
About 3PEA International Inc.
3PEA International, Inc. is a payment solutions company that focuses on providing prepaid debit program management and processing services. Utilizing its PaySign® Platform, the Company offers customizable prepaid debit card solutions for a variety of consumer and corporate applications. As part of the Company’s customized prepaid card solutions 3PEA provides transaction processing, card creation and fulfillment, cardholder enrollment, value loading, cardholder account management, reporting and in-house customer service. 3PEA strives to provide its clients with significant time-to market, cost, scalability, reliability and security benefits. For further information visit: www.3pea.com.
Forward-Looking Statements:
Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the companies, are forward-looking statements that involve risks and uncertainties. There is no assurance that such statements will prove to be accurate, and actual results and future events could differ materially. 3PEA undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events, or otherwise.
Contacts
3PEA International
Brian Polan, 702-749-7234
Investor Relations
bpolan@3pea.com
Source: 3PEA International, Inc.
