Exhibit 99.33
POINTS INTERNATIONAL LTD. REPORTS FIRST QUARTER RESULTS
Thursday May 12, 4:30 pm ET
FIRST QUARTER REVENUE RISES 59% YEAR-OVER-YEAR
TORONTO, May 12 /CNW/ - Points International Ltd. (TSX: PTS; OTC: PTSEF; "Points
International" or the "Company"), the owner and operator of Points.com, the
world's leading reward program management portal, announced financial results
for the first quarter ended March 31, 2005.
The Company reported revenue of $2.58 million in the 2005 first quarter, an
increase of 59% versus $1.62 million during the same period in 2004. Adjusted
for the impact of the weakened US dollar, Points International's Q1 revenue
growth would have included a further $166,624, resulting in 70% growth vs. the
same period in 2004. Strong growth at both Points.com and Points.com Business
Solutions contributed to the growth in revenue. The Company powered the online
exchange, sale and transfer of 1.62 billion points and miles in the first
quarter of 2005, up from 1.45 billion during the fourth quarter of 2004 and 0.78
billion during the same period last year.
The Company recorded an operating loss (i.e. loss before interest, amortization
and other items) of $1.43 million for the first quarter of 2005, versus $1.16
million in the fourth quarter of 2004 and $1.09 million in the same period last
year. The increased loss was a result of higher employment and product
development costs in connection with the Company's launch of its enhanced
consumer Website which went live on April 10, 2005. The Company reported a net
loss of $2.57 million, or ($0.04) per share versus a net loss of $2.50 million,
or ($0.04) per share, in the 2004 fourth quarter. Non-cash charges, including
accrued interest, the amortization of property, plant and equipment, intangible
assets and deferred costs accounted for $1.14 million of the first quarter 2005
net loss versus $1.18 million in the first quarter of 2004.
"The first Quarter saw several key objectives met," said Rob MacLean, Points
International's CEO. "Our success in developing important relationships with the
major players in the loyalty industry continued with the launch of a
comprehensive relationship with Cendant Corporation's Trip Rewards program, an
important addition to our list of Hotel partners. Also, having identified the
financial services sector as an important area of opportunity for Points.com, we
were particularly pleased to have established a relationship with American
Express."
In addition, much of the Company's focus in the first quarter was associated
with the development of its enhanced website. "I was particularly pleased with
the efforts of our team working on the enhanced consumer application" said
MacLean, "To deploy such a significant project ahead of schedule was a great
accomplishment and allows us to accelerate our plan for additional functionality
on the site."
The site will continue to undergo development throughout the summer with market
testing, partner integration and implementation of the ATG Marketing Enterprise
System that will become an important tool to assist consumers in using the
comprehensive Join, Earn, Buy and Swap tools most effectively.
The Company also was active in closing a private placement on April 5, 2005 that
raised gross proceeds of $15.8 million. This investment made by institutional
and other accredited investors, including IAC/InterActiveCorp, will be primarily
used for marketing and technology development associated with the Company's
feature-rich reward management portal.
The Company further strengthened its balance sheet through the sale by CIBC
Capital Partners of its $6 million convertible debenture to this same investor
group. The debenture was amended upon the sale, improving the terms and
conditions for Points International.
"We saw a solid increase in revenue and activity versus the first quarter of
2004," added Mr. MacLean. "This increase was achieved with very limited
marketing. We are quite excited about upcoming
initiatives to begin driving significant consumer traffic to the Website at the
end of the third quarter of the year."
First quarter highlights include:
- Growing revenue from both Points.com and Points.com Business
Solutions operations. Revenue from Points.com increased by 183%,
over the same period in 2004, while Points.com Business Solutions
grew by 58%.
- Strong recurring revenues. 96% of Points.com's revenues were
recurring versus 97% in the same period in 2004.
- Increase in number of partners on Points.com. Points.com
increased its partners to 47 in the first quarter of 2005, versus
36 in the same period last year
- Increase in Points.com Business Solutions partners and products.
21 partners are now offering Points.com Business Solutions
products to their members, increased from 18 in the same period
last year. There are now 55 product installations in the market,
up from 45 in the same period last year, providing a strong and
growing recurring revenue base for the Company.
- Growth in Transaction activity. Cumulative miles and points
transacted increased to 9.57 billion, up 20% from 7.94 billion in
the fourth quarter in 2004 and 151% from 3.81 billion in the same
period last year.
- Increase in size and commissions per transaction. The average
number of miles or points exchanged per transaction was 19,907,
an increase of 17% versus the first quarter of 2004.
- Increase in Website traffic. Approximately 0.39 million unique
visitors accessed the Company's Points.com Website in the first
quarter of 2005, compared to 0.23 million visitors during the
same period last year.
- Strong User Registration. The Company's database of Registered
Users increased to approximately 655,000 at the end of the first
quarter in 2005.
The Company expects that the second quarter 2005 results will be released on or
about August 15, 2005.
About Points International Ltd.
Points International Ltd. is the owner and operator of Points.com, the world's
leading reward program management portal. At Points.com consumers can Swap miles
and points between reward programs so that they can Get More Rewards,
Faster(TM). Points.com has attracted over 40 of the world's leading reward
programs including Delta SkyMiles(R), eBay Anything Points, American Airlines
AAdvantage(R) program, S&H greenpoints, Cendant Trip Rewards, Starbucks Asia
Miles(R), and Intercontinental Hotels Group's Priority Club(R) Rewards.
Website: http://www.points.com /
POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
AS AT 2005 2004
- ----- ----------- ------------
ASSETS
CURRENT
Cash and cash equivalents (Note 7) 19,654,600 13,754,818
Accounts receivable 1,609,279 2,024,342
Prepaids and sundry assets 1,352,473 1,229,091
----------- -----------
22,616,352 17,008,251
PROPERTY, PLANT AND EQUIPMENT 3,118,364 2,056,282
GOODWILL AND INTANGIBLE ASSETS 8,152,308 8,282,453
DEFERRED COSTS 2,097,804 2,242,868
FUTURE INCOME TAXES RECOVERABLE 590,000 590,000
----------- -----------
13,958,476 13,171,603
----------- -----------
$36,574,828 $30,179,854
----------- -----------
POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
AS AT 2005 2004
- ----- ------------ ------------
LIABILITIES
CURRENT
Accounts payable and accrued liabilities 1,694,133 1,894,599
Deposits 17,776,537 13,153,623
Current portion of loan payable 33,515 29,860
Current portion of acquisition loan payable 765,123 777,443
Convertible Debenture (Note 8) -- 8,920,373
------------ ------------
20,269,308 24,775,898
------------ ------------
LOAN PAYABLE 55,614 67,186
ACQUISITION LOAN PAYABLE -- 380,118
CONVERTIBLE DEBENTURE (NOTE 8) 9,150,169 --
CONVERTIBLE PREFERRED SHARES (NOTE 9) 17,564,089 13,892,478
------------ ------------
26,769,872 14,339,782
------------ ------------
47,039,180 39,115,680
------------ ------------
SHAREHOLDERS' EQUITY
CAPITAL STOCK 23,659,566 22,705,734
WARRANTS 2,610,992 2,610,992
CONTRIBUTED SURPLUS 567,949 482,092
DEFICIT (37,302,859) (34,734,644)
------------ ------------
(10,464,352) (8,935,826)
------------ ------------
$ 36,574,828 $ 30,179,854
------------ ------------
POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS AND DEFICIT
March 31, March 31,
FOR THE THREE MONTHS ENDED 2005 2004
- -------------------------- ------------ ------------
REVENUES
Points operations $ 2,540,658 $ 1,532,513
Interest income 37,251 85,052
------------ ------------
2,577,909 1,617,565
GENERAL AND ADMINISTRATION EXPENSES 4,005,639 2,711,438
------------ ------------
LOSS - Before interest, amortization and
other items (1,427,730) (1,093,874)
------------ ------------
Interest on convertible debenture 229,796 207,024
Interest on Series Two Preferred Share 217,000 217,000
Interest and bank charges 4,791 261
Amortization of property, plant and equipment,
intangible assets and deferred costs 688,898 443,917
------------ ------------
1,140,485 868,202
------------ ------------
LOSS (2,568,215) (1,962,076)
DEFICIT - Beginning of period (34,734,644) (25,926,361)
DEFICIT - End of period (37,302,859) (27,888,437)
------------ ------------
LOSS PER SHARE (Note 2) ($0.04) ($0.03)
------------ ------------
POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
March 31, March 31,
FOR THE THREE MONTHS ENDED 2005 2004
- -------------------------- ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ($2,568,215) ($1,962,076)
Items not affecting cash
Amortization of property, plant and
equipment 102,467 56,354
Amortization of deferred costs 132,925 199,346
Amortization of intangible assets 453,506 188,217
Deferred costs on convertible debenture 12,139 --
Employee stock option expense (Note 5) 99,503 60,482
Cancellation of warrants issued for
services -- (1,167)
Interest on Series Two Preferred Shares 217,000 217,000
Interest accrued on convertible debenture 229,796 207,024
------------ ------------
(1,320,879) (1,034,820)
Changes in non-cash balances related to
operations (Note 6 (a)) 4,714,130 5,159,380
------------ ------------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 3,393,251 4,124,560
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment,
net of proceeds (1,164,548) (211,664)
Purchase of intangible assets (9,662) (17,004)
Payments for the acquisition of MilePoint,
Inc. (400,000) --
Costs related to the acquisition of
MilePoint, Inc. (306,138) (200,000)
------------ ------------
CASH FLOWS USED IN INVESTING ACTIVITIES (1,880,348) (428,668)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Series Four Preferred Share
(Note 9) 3,454,611 --
Repayments on loan payable (7,917) --
Deferred financing costs -- 70,018
Issuance of capital stock, net of share
issue costs 940,186 202,485
------------ ------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 4,386,880 272,503
------------ ------------
INCREASE (DECREASE) IN CASH 5,899,782 3,968,395
CASH AND CASH EQUIVALENTS - Beginning of
period 13,754,818 $ 20,274,836
------------ ------------
CASH AND CASH EQUIVALENTS - End of period $ 19,654,600 $ 24,243,231
------------ ------------
POINTS INTERNATIONAL LTD.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
1. Accounting policies
The company's interim financial statements have been prepared using
accounting policies consistent with those used for the preparation of
its annual financial statements. These interim financial statements
should be read in conjunction with the company's 2004 audited
consolidated financial statements. These financial statements contain
all adjustments which management believes necessary for fair
presentation of the financial position, results of operations and cash
flows.
a. Basis of presentation
The consolidated financial statements include the accounts
of the Company and from their respective dates of
acquisition of control or formation of its wholly owned
subsidiaries. All inter-company transactions and amounts
have been eliminated on consolidation.
2. Loss per share
a. Loss per share
Loss per share is calculated on the basis of the weighted
average number of common shares outstanding for the three
months ended March 31, 2005 that amounted to 71,561,017
shares (March 31, 2004 - 63,394,531).
b. Fully-diluted loss per share
The fully-diluted loss per share has not been computed, as
the effect would be anti-dilutive.
3. Segmented information
Reportable segments: The company has only one operating segment whose
operating results are regularly reviewed by the company's chief
operating decision maker and for which complete and discrete financial
information is available. The company's business is carried on in the
industry of loyalty program asset management. The attached
consolidated balance sheets as at March 31, 2005 and December 31, 2004
present the financial position of this segment. The continuing
operations reflected on the attached consolidated statements of
operations are those of this operating segment.
Enterprise-wide disclosures: $2,389,066 (March 31, 2004 - $1,475,886)
of the company's revenues were generated in the U.S. for the quarter,
with the remaining revenues generated in Canada, Europe and Asia. A
significant majority of the company's assets are located in Canada.
4. Major Customers
For the quarter ended March 31, 2005, there are four customers that
individually represent greater than ten percent of the Corporation's
consolidated revenues. In aggregate, the four customers represent
approximately 64% of the Corporation's consolidated revenues. Two
customers individually represented greater than ten percent of
consolidated revenues in the first quarter of 2004 (65% in aggregate)
and two customers individually represented greater than ten percent of
consolidated revenues in the fourth quarter of 2004 (34% in
aggregate). In addition, as at March 31, 2005, 63% (first quarter 2004
- 80% and fourth quarter 2004 - 59%) of the Corporation's deposits are
due to these customers.
5. Stock-based compensation
The Corporation accounts for stock options granted in this stock
option plan in accordance with the fair value based method of
accounting for stock-based compensation. The compensation cost that
has been charged against income for this plan is $99,503 for the three
months ended March 31, 2005 ($60,482 for the three months ended March
31, 2004).
During the quarter ended March 31, 2005, 200,000 options were issued
to employees and 40,000 options previously granted were cancelled (no
options were issued in the first quarter of 2004).
6. Statement of Cash Flows
a. Changes in non-cash balances related to operations are as
follows:
Three Months Ended
Mar. 31
-----------------------
2005 2004
---------- ----------
Decrease (Increase) in accounts receivable $ 415,063 $ 117,270
Decrease (Increase) in prepaid and sundry assets $ (123,382) $ (300,445)
Increase in liability related to the Acquisition of MilePoint, Inc. $ -- $ 74,509
Increase (Decrease) in accounts payable and accrued liabilities $ (200,466) $ (225,791)
Increase (Decrease) in deposits $4,622,914 $5,493,837
---------- ----------
$4,714,130 $5,159,380
========== ==========
b. Supplemental information
Interest and taxes
Interest of $4,631 was paid during the quarter ended March
31, 2005. Interest of $35,412 was received during the
quarter ended March 31, 2005. No income taxes have been
paid.
Non-cash transactions
Non-cash transactions for the quarter ended March 31, 2005
are as follows:
(i) 475,600 shares of Points.com Inc. were acquired in
exchange for 1,190,856 shares of the Corporation.
(ii) $9,000 of revenue earned for hosting services provided
was paid in loyalty currency. The currency was valued
at the purchase price of the miles and the amount is
included in prepaid and sundry assets. The expense will
be recognized as the currency is used.
(iii) $39,786 of revenue earned for membership fees provided
was paid in one-week accommodation certificates. The
certificates are valued at their average cost and are
included in prepaid and sundry assets. The expense will
be recognized as the accommodation certificates are
used.
(iv) The Corporation received $43,539 of loyalty currency
from a partner as reimbursement of a portion of the
partner's direct expenses for the services provided by
the Corporation. This amount is included in prepaid and
sundry assets and will be expensed as the currency is
used.
(v) Interest of $7,562 was accrued on the acquisition of
MilePoint, Inc.
(vi) Interest of $229,796 was accrued on the convertible
debenture.
(vii) Interest of $217,000 was accrued on the Series Two
Preferred Share.
c. Cash and cash equivalents consist of:
March 31, December 31,
AS AT 2005 2004
- ----- ----------- ------------
Cash $16,124,713 $10,086,111
Short-Term Investments 46,073 544,945
Cash held by credit card processor 3,483,814 3,123,762
----------- -----------
Total 19,654,600 13,754,818
=========== ===========
7. Private Placement
On March 29, 2005, the Corporation entered into binding agreements to
issue approximately 18.1 million common shares at $0.683 per share and
one Series Four Preferred Share for approximately $3.5 million
(collectively, the "Private Placement Transaction"). On the same date
CIBC Capital Partners, a division of Canadian Imperial Bank of
Commerce, ("CIBC") agreed to sell to the purchasers in the Private
Placement Transaction an amended version of the $6 million debenture
issued by the Corporation to CIBC in 2001 (the "Debenture") and the
Series One Preferred Share in the capital of the Corporation held by
CIBC (the "Debenture Transaction"). The Private Placement Transaction
and the Debenture Transaction closed on April 4, 2005.
The Series Four Preferred Share has been included, and the Debenture
reclassified to long-term liabilities, in the Corporation's unaudited
consolidated balance sheet as at March 31, 2005. See Notes 8 and 9 for
additional information.
The Pro Forma effect of the Private Placement Transaction is an
increase to share capital and cash of approximately $11 million. As a
result the Corporation's working capital at March 31, 2005 on a Pro
Forma basis would be increased to $13.3 million.
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEETS
March 31, March 31,
2005 2005
---------------- Transaction ------------
AS AT POST TRANSACTION Adjustments ACTUAL
- ----- ---------------- ----------- ------------
ASSETS
CURRENT
Cash and cash equivalents $ 30,654,600 $11,000,000 $ 19,654,600
Accounts receivable 1,609,279 -- 1,609,279
Prepaids and sundry assets 1,352,473 -- 1,352,473
------------ ----------- ------------
33,616,352 11,000,000 22,616,352
PROPERTY, PLANT AND EQUIPMENT 3,118,364 -- 3,118,364
GOODWILL AND INTANGIBLE ASSETS 8,152,308 -- 8,152,308
DEFERRED COSTS 2,097,804 -- 2,097,804
FUTURE INCOME TAXES RECOVERABLE 590,000 -- 590,000
------------ ----------- ------------
13,958,476 -- 13,958,476
$ 47,574,828 $11,000,000 $ 36,574,828
============ =========== ============
LIABILITIES
CURRENT
Accounts payable and accrued
liabilities 1,694,133 $ -- 1,694,133
Deposits 17,776,537 -- 17,776,537
Current portion of loan payable 33,515 -- 33,515
Current portion of acquisition
loan payable 765,123 -- 765,123
------------ ----------- ------------
20,269,308 -- 20,269,308
LOAN PAYABLE 55,614 -- 55,614
ACQUISITION LOAN PAYABLE -- -- --
CONVERTIBLE DEBENTURE 9,150,169 -- 9,150,169
CONVERTIBLE PREFERRED SHARES 17,564,089 -- 17,564,089
------------ ----------- ------------
47,039,180 -- 47,039,180
------------ ----------- ------------
SHAREHOLDERS' EQUITY
CAPITAL STOCK(1) 34,472,862 10,813,296 23,659,566
CONTRIBUTED SURPLUS 567,949 567,949
WARRANTS 2,797,696 186,704 2,610,992
DEFICIT (37,302,859) -- (37,302,859)
------------ ----------- ------------
535,648 11,000,000 (10,464,352)
------------ ----------- ------------
$ 47,574,828 $11,000,000 $ 36,574,828
------------ ----------- ------------
Note:
1 - Capital stock is net of share issue costs of CAD $1.3M.
8. Sale of the Convertible Debenture
On March 29, 2005 the Corporation and the purchasers in the Private
Placement Transaction had entered into a binding agreement to purchase
the Debenture (in its amended and restated form) from CIBC. As a
result, the Debenture was reclassified to long-term liabilities in the
Corporation's unaudited consolidated balance sheet as at March 31,
2005.
In connection with this transaction, the Debenture was amended to,
among other things, (i) reduce the interest rate from 11% to 8%, (ii)
eliminate all negative covenants, (iii) eliminate certain positive
covenants, (iv) remove certain events of default and (v) release all
security over the assets of Points and its subsidiaries.
Under the terms of the Debenture, (i) the Debenture is repayable
(without accrued interest, the repayment of which is waived) by the
Corporation within 30 days of a change of control of the Corporation
resulting from the exercise of certain warrants issued by the
Corporation on April 11, 2003 to Points Investments, Inc, an affiliate
of InterActiveCorp and (ii) the principal amount of the Debenture will
automatically convert into Common Shares immediately preceding certain
liquidity events and, unless previously repaid, will automatically
convert in 18,908,070 common shares in April 2006. Except in
connection with the exercise of the Warrants, Points is not entitled
to pre-pay the Debenture.
9. Issuance of Series Four Preferred Share
In the 2005 investment, Points issued one Series Four Preferred Share
for aggregate cash consideration of $3,454,611. On March 29, 2005 the
Corporation and IAC entered into a binding agreement to issue the
Series Four Preferred Share and the cash was received by the
Corporation prior to quarter end. As a result, the cash and the
preferred share are included in the Corporation's unaudited
consolidated balance sheet as at March 31, 2005.
The Series Four Preferred Share is convertible, for no additional
consideration, into 4,504,069 Common Shares. The Series Four Preferred
Share contains anti-dilution protection provisions identical to the
Series Two Preferred Share (see the Corporation's 2004 audited
consolidated financial statements for information with respect to the
terms of the Series Two Preferred Share).
http://www.newswire.ca/en/releases/orgDisplay.cgi?okey=48358
FOR FURTHER INFORMATION
Steve Yuzpe, Investor Relations, Chief Financial Officer, (416) 596-6382,
steve.yuzpe@points.com or Business Development Inquiries, Christopher
Barnard, President, (416) 596-6381, christopher.barnard@points.com, both of
Points International Ltd. or Ed Lewis of CEOcast, Inc., (212) 732-4300,
elewis@ceocast.com, for Points International
- -------------------------------------
Source: Points International Ltd.
POINTS INTERNATIONAL LTD. REPORTS FIRST QUARTER RESULTS
FIRST QUARTER REVENUE RISES 59% YEAR-OVER-YEAR
TORONTO, May 12th, 2005 - POINTS INTERNATIONAL LTD. (TSX: PTS; OTC: PTSEF)
("Points International" or the "Company"), the owner and operator of Points.com,
the world's leading reward program management portal, announced financial
results for the first quarter ended March 31, 2005.
The Company reported revenue of $2.58 million in the 2005 first quarter, an
increase of 59% versus $1.62 million during the same period in 2004. Adjusted
for the impact of the weakened US dollar, Points International's Q1 revenue
growth would have included a further $166,624, resulting in 70% growth vs. the
same period in 2004. Strong growth at both Points.com and Points.com Business
Solutions contributed to the growth in revenue. The Company powered the online
exchange, sale and transfer of 1.62 billion points and miles in the first
quarter of 2005, up from 1.45 billion during the fourth quarter of 2004 and 0.78
billion during the same period last year.
The Company recorded an operating loss (i.e. loss before interest, amortization
and other items) of $1.43 million for the first quarter of 2005, versus $1.16
million in the fourth quarter of 2004 and $1.09 million in the same period last
year. The increased loss was a result of higher employment and product
development costs in connection with the Company's launch of its enhanced
consumer Website which went live on April 10, 2005. The Company reported a net
loss of $2.57 million, or ($0.04) per share versus a net loss of $2.50 million,
or ($0.04) per share, in the 2004 fourth quarter. Non-cash charges, including
accrued interest, the amortization of property, plant and equipment, intangible
assets and deferred costs accounted for $1.14 million of the first quarter 2005
net loss versus $1.18 million in the first quarter of 2004.
"The first Quarter saw several key objectives met," said Rob MacLean, Points
International's CEO. "Our success in developing important relationships with the
major players in the loyalty industry continued with the launch of a
comprehensive relationship with Cendant Corporation's Trip Rewards program, an
important addition to our list of Hotel partners. Also, having identified the
financial services sector as an important area of opportunity for Points.com, we
were particularly pleased to have established a relationship with American
Express."
Page 1 of 15
In addition, much of the Company's focus in the first quarter was associated
with the development of its enhanced website. "I was particularly pleased with
the efforts of our team working on the enhanced consumer application" said
MacLean, "To deploy such a significant project ahead of schedule was a great
accomplishment and allows us to accelerate our plan for additional functionality
on the site."
The site will continue to undergo development throughout the summer with market
testing, partner integration and implementation of the ATG Marketing Enterprise
System that will become an important tool to assist consumers in using the
comprehensive Join, Earn, Buy and Swap tools most effectively.
The Company also was active in closing a private placement on April 5, 2005 that
raised gross proceeds of $15.8 million. This investment made by institutional
and other accredited investors, including IAC/InterActiveCorp, will be primarily
used for marketing and technology development associated with the Company's
feature - rich reward management portal.
The Company further strengthened its balance sheet through the sale by CIBC
Capital Partners of its $6 million convertible debenture to this same investor
group. The debenture was amended upon the sale, improving the terms and
conditions for Points International.
"We saw a solid increase in revenue and activity versus the first quarter of
2004," added Mr. MacLean. "This increase was achieved with very limited
marketing. We are quite excited about upcoming initiatives to begin driving
significant consumer traffic to the Website at the end of the third quarter of
the year."
Page 2 of 15
First quarter highlights include:
- - Growing revenue from both Points.com and Points.com Business Solutions
operations. Revenue from Points.com increased by 183%, over the same period
in 2004, while Points.com Business Solutions grew by 58%.
- - Strong recurring revenues. 96% of Points.com's revenues were recurring
versus 97% in the same period in 2004.
- - Increase in number of partners on Points.com. Points.com increased its
partners to 47 in the first quarter of 2005, versus 36 in the same period
last year
- - Increase in Points.com Business Solutions partners and products. 21
partners are now offering Points.com Business Solutions products to their
members, increased from 18 in the same period last year. There are now 55
product installations in the market, up from 45 in the same period last
year, providing a strong and growing recurring revenue base for the
Company.
- - Growth in Transaction activity. Cumulative miles and points transacted
increased to 9.57 billion, up 20% from 7.94 billion in the fourth quarter
in 2004 and 151% from 3.81 billion in the same period last year.
- - Increase in size and commissions per transaction. The average number of
miles or points exchanged per transaction was 19,907, an increase of 17%
versus the first quarter of 2004.
- - Increase in Website traffic. Approximately 0.39 million unique visitors
accessed the Company's Points.com Website in the first quarter of 2005,
compared to 0.23 million visitors during the same period last year.
- - Strong User Registration. The Company's database of Registered Users
increased to approximately 655,000 at the end of the first quarter in 2005.
The Company expects that the second quarter 2005 results will be released on or
about August 15, 2005.
Page 3 of 15
ABOUT POINTS INTERNATIONAL LTD.
Points International Ltd. is the owner and operator of Points.com, the world's
leading reward program management portal. At Points.com consumers can Swap miles
and points between reward programs so that they can Get More Rewards,
Faster(TM). Points.com has attracted over 40 of the world's leading reward
programs including Delta SkyMiles(R), eBay Anything Points, American Airlines
AAdvantage(R) program, S&H greenpoints, Cendant Trip Rewards, Starbucks Asia
Miles(R), and Intercontinental Hotels Group's Priority Club(R) Rewards.
Website: http://www.points.com/
FOR FURTHER INFORMATION
Steve Yuzpe, Investor Relations, Chief Financial Officer, 416-596-6382,
steve.yuzpe@points.com,
or Business Development Inquiries, Christopher Barnard, President,
416-596-6381, christopher.barnard@points.com, both of Points International
Ltd.
or Ed Lewis of CEOcast, Inc., +1-212-732-4300, elewis@ceocast.com, for
Points International
Page 4 of 15
POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
Page 5 of 15
POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
AS AT 2005 2004
- ----- ----------- ------------
ASSETS
CURRENT
Cash and cash equivalents (Note 7) 19,654,600 13,754,818
Accounts receivable 1,609,279 2,024,342
Prepaids and sundry assets 1,352,473 1,229,091
----------- -----------
22,616,352 17,008,251
PROPERTY, PLANT AND EQUIPMENT 3,118,364 2,056,282
GOODWILL AND INTANGIBLE ASSETS 8,152,308 8,282,453
DEFERRED COSTS 2,097,804 2,242,868
FUTURE INCOME TAXES RECOVERABLE 590,000 590,000
----------- -----------
13,958,476 13,171,603
----------- -----------
$36,574,828 $30,179,854
=========== ===========
Page 6 of 15
POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
AS AT 2005 2004
- ----- ------------ ------------
LIABILITIES
CURRENT
Accounts payable and accrued liabilities 1,694,133 1,894,599
Deposits 17,776,537 13,153,623
Current portion of loan payable 33,515 29,860
Current portion of acquisition loan payable 765,123 777,443
Convertible Debenture (Note 8) -- 8,920,373
------------ ------------
20,269,308 24,775,898
------------ ------------
LOAN PAYABLE 55,614 67,186
ACQUISITION LOAN PAYABLE -- 380,118
CONVERTIBLE DEBENTURE (NOTE 8) 9,150,169 --
CONVERTIBLE PREFERRED SHARES (NOTE 9) 17,564,089 13,892,478
------------ ------------
26,769,872 14,339,782
------------ ------------
47,039,180 39,115,680
------------ ------------
SHAREHOLDERS' EQUITY
CAPITAL STOCK 23,659,566 22,705,734
WARRANTS 2,610,992 2,610,992
CONTRIBUTED SURPLUS 567,949 482,092
DEFICIT (37,302,859) (34,734,644)
------------ ------------
(10,464,352) (8,935,826)
------------ ------------
$ 36,574,828 $ 30,179,854
============ ============
Page 7 of 15
POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS AND DEFICIT
MARCH 31, MARCH 31,
FOR THE THREE MONTHS ENDED 2005 2004
- -------------------------- ------------ ------------
REVENUES
Points operations $ 2,540,658 $ 1,532,513
Interest income 37,251 85,052
------------ ------------
2,577,909 1,617,565
GENERAL AND ADMINISTRATION EXPENSES 4,005,639 2,711,438
------------ ------------
LOSS - Before interest, amortization and
other items (1,427,730) (1,093,874)
------------ ------------
Interest on convertible debenture 229,796 207,024
Interest on Series Two Preferred Share 217,000 217,000
Interest and bank charges 4,791 261
Amortization of property, plant and equipment,
intangible assets and deferred costs 688,898 443,917
------------ ------------
1,140,485 868,202
------------ ------------
LOSS (2,568,215) (1,962,076)
DEFICIT - Beginning of period (34,734,644) (25,926,361)
DEFICIT - End of period (37,302,859) (27,888,437)
============ ============
LOSS PER SHARE (Note 2) ($0.04) ($0.03)
============ ============
Page 8 of 15
POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
MARCH 31, MARCH 31,
FOR THE THREE MONTHS ENDED 2005 2004
- -------------------------- ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ($2,568,215) ($1,962,076)
Items not affecting cash
Amortization of property, plant and equipment 102,467 56,354
Amortization of deferred costs 132,925 199,346
Amortization of intangible assets 453,506 188,217
Deferred costs on convertible debenture 12,139 --
Employee stock option expense (Note 5) 99,503 60,482
Cancellation of warrants issued for services -- (1,167)
Interest on Series Two Preferred Shares 217,000 217,000
Interest accrued on convertible debenture 229,796 207,024
------------ ------------
(1,320,879) (1,034,820)
Changes in non-cash balances related to operations
(Note 6 (a)) 4,714,130 5,159,380
------------ ------------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 3,393,251 4,124,560
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment,
net of proceeds (1,164,548) (211,664)
Purchase of intangible assets (9,662) (17,004)
Payments for the acquisition of MilePoint, Inc. (400,000) --
Costs related to the acquisition of MilePoint, Inc. (306,138) (200,000)
------------ ------------
CASH FLOWS USED IN INVESTING ACTIVITIES (1,880,348) (428,668)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Series Four Preferred Share (Note 9) 3,454,611 --
Repayments on loan payable (7,917) --
Deferred financing costs -- 70,018
Issuance of capital stock, net of share issue costs 940,186 202,485
------------ ------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 4,386,880 272,503
------------ ------------
INCREASE (DECREASE) IN CASH 5,899,782 3,968,395
CASH AND CASH EQUIVALENTS - Beginning of period 13,754,818 $ 20,274,836
============ ============
CASH AND CASH EQUIVALENTS - End of period $ 19,654,600 $ 24,243,231
============ ============
POINTS INTERNATIONAL LTD.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
1. Accounting policies
The company's interim financial statements have been prepared using accounting
policies consistent with those used for the preparation of its annual financial
statements. These interim financial statements should be read in conjunction
with the company's 2004 audited consolidated financial statements. These
financial statements contain all adjustments which management believes necessary
for fair presentation of the financial position, results of operations and cash
flows.
a. Basis of presentation
The consolidated financial statements include the accounts of the
Company and from their respective dates of acquisition of control or
formation of its wholly owned subsidiaries. All inter-company
transactions and amounts have been eliminated on consolidation.
2. Loss per share
a) Loss per share
Loss per share is calculated on the basis of the weighted average
number of common shares outstanding for the three months ended March
31, 2005 that amounted to 71,561,017 shares (March 31, 2004 -
63,394,531).
b) Fully-diluted loss per share
The fully-diluted loss per share has not been computed, as the effect would be
anti-dilutive.
3. Segmented information
Reportable segments: The company has only one operating segment whose operating
results are regularly reviewed by the company's chief operating decision maker
and for which complete and discrete financial information is available. The
company's business is carried on in the industry of loyalty program asset
management. The attached consolidated balance sheets as at March 31, 2005 and
December 31, 2004 present the financial position of this segment. The continuing
operations reflected on the attached consolidated statements of operations are
those of this operating segment.
Enterprise-wide disclosures: $2,389,066 (March 31, 2004 - $1,475,886) of the
company's revenues were generated in the U.S. for the quarter, with the
remaining revenues
generated in Canada, Europe and Asia. A significant majority of the company's
assets are located in Canada.
4. Major Customers
For the quarter ended March 31, 2005, there are four customers that individually
represent greater than ten percent of the Corporation's consolidated revenues.
In aggregate, the four customers represent approximately 64% of the
Corporation's consolidated revenues. Two customers individually represented
greater than ten percent of consolidated revenues in the first quarter of 2004
(65% in aggregate) and two customers individually represented greater than ten
percent of consolidated revenues in the fourth quarter of 2004 (34% in
aggregate). In addition, as at March 31, 2005, 63% (first quarter 2004 - 80% and
fourth quarter 2004 - 59%) of the Corporation's deposits are due to these
customers.
5. Stock-based compensation
The Corporation accounts for stock options granted in this stock option plan in
accordance with the fair value based method of accounting for stock-based
compensation. The compensation cost that has been charged against income for
this plan is $99,503 for the three months ended March 31, 2005 ($60,482 for the
three months ended March 31, 2004).
During the quarter ended March 31, 2005, 200,000 options were issued to
employees and 40,000 options previously granted were cancelled (no options were
issued in the first quarter of 2004).
6. Statement of Cash Flows
a. Changes in non-cash balances related to operations are as follows:
THREE MONTHS ENDED
MAR, 31
-----------------------
2005 2004
---------- ----------
Decrease (Increase) in accounts receivable $ 415,063 $ 117,270
Decrease (Increase) in prepaid and sundry assets $ (123,382) $ (300,445)
Increase in liability related to the Acquisition
of MilePoint, Inc. $ -- $ 74,509
Increase (Decrease) in accounts payable and
accrued liabilities $ (200,466) $ (225,791)
Increase (Decrease) in deposits $4,622,914 $5,493,837
---------- ----------
$4,714,130 $5,159,380
========== ==========
b. Supplemental information
Interest and taxes
Interest of $4,631 was paid during the quarter ended March 31, 2005.
Interest of $35,412 was received during the quarter ended March 31,
2005. No income taxes have been paid.
Non-cash transactions
Non-cash transactions for the quarter ended March 31, 2005 are as
follows:
(i) 475,600 shares of Points.com Inc. were acquired in exchange for
1,190,856 shares of the Corporation.
(ii) $9,000 of revenue earned for hosting services provided was paid
in loyalty currency. The currency was valued at the purchase
price of the miles and the amount is included in prepaid and
sundry assets. The expense will be recognized as the currency is
used.
(iii) $39,786 of revenue earned for membership fees provided was paid
in one-week accommodation certificates. The certificates are
valued at their average cost and are included in prepaid and
sundry assets. The expense will be recognized as the
accommodation certificates are used.
(iv) The Corporation received $43,539 of loyalty currency from a
partner as reimbursement of a portion of the partner's direct
expenses for the services provided by the Corporation. This
amount is included in prepaid and sundry assets and will be
expensed as the currency is used.
(v) Interest of $7,562 was accrued on the acquisition of MilePoint,
Inc.
(vi) Interest of $229,796 was accrued on the convertible debenture.
(vii) Interest of $217,000 was accrued on the Series Two Preferred
Share.
c. Cash and cash equivalents consist of:
March 31, December 31,
AS AT 2005 2004
- ----- ----------- ------------
Cash $16,124,713 $10,086,111
Short-Term Investments 46,073 544,945
Cash held by credit card processor 3,483,814 3,123,762
----------- -----------
Total 19,654,600 13,754,818
=========== ===========
7. Private Placement
On March 29, 2005, the Corporation entered into binding agreements to issue
approximately 18.1 million common shares at $0.683 per share and one Series Four
Preferred Share for approximately $3.5 million (collectively, the "Private
Placement Transaction"). On the same date CIBC Capital Partners, a division of
Canadian Imperial Bank of Commerce, ("CIBC") agreed to sell to the purchasers in
the Private Placement Transaction an amended version of the $6 million debenture
issued by the Corporation to CIBC in 2001 (the "Debenture") and the Series One
Preferred Share in the capital of the Corporation held by CIBC (the "Debenture
Transaction"). The Private Placement Transaction and the Debenture Transaction
closed on April 4, 2005.
The Series Four Preferred Share has been included, and the Debenture
reclassified to long-term liabilities, in the Corporation's unaudited
consolidated balance sheet as at March 31, 2005. See Notes 8 and 9 for
additional information.
The Pro Forma effect of the Private Placement Transaction is an increase to
share capital and cash of approximately $11 million. As a result the
Corporation's working capital at March 31, 2005 on a Pro Forma basis would be
increased to $13.3 million.
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEETS
MARCH 31, TRANSACTION MARCH 31,
AS AT 2005 ADJUSTMENTS 2005
- ----- ---------------- ----------- ------------
POST TRANSACTION ACTUAL
ASSETS
CURRENT
Cash and cash equivalents $ 30,654,600 $11,000,000 $ 19,654,600
Accounts receivable 1,609,279 -- 1,609,279
Prepaids and sundry assets 1,352,473 -- 1,352,473
------------ ----------- ------------
33,616,352 11,000,000 22,616,352
PROPERTY, PLANT AND EQUIPMENT 3,118,364 -- 3,118,364
GOODWILL AND INTANGIBLE ASSETS 8,152,308 -- 8,152,308
DEFERRED COSTS 2,097,804 -- 2,097,804
FUTURE INCOME TAXES RECOVERABLE 590,000 -- 590,000
------------ ----------- ------------
13,958,476 -- 13,958,476
$ 47,574,828 $11,000,000 $ 36,574,828
============ =========== ============
LIABILITIES
CURRENT
Accounts payable and accrued
liabilities 1,694,133 $ -- 1,694,133
Deposits 17,776,537 -- 17,776,537
Current portion of loan payable 33,515 -- 33,515
Current portion of acquisition
loan payable 765,123 -- 765,123
------------ ----------- ------------
20,269,308 -- 20,269,308
LOAN PAYABLE 55,614 -- 55,614
ACQUISITION LOAN PAYABLE -- -- --
CONVERTIBLE DEBENTURE 9,150,169 -- 9,150,169
CONVERTIBLE PREFERRED SHARES 17,564,089 -- 17,564,089
------------ ----------- ------------
47,039,180 -- 47,039,180
------------ ----------- ------------
SHAREHOLDERS' EQUITY
CAPITAL STOCK(1) 34,472,862 10,813,296 23,659,566
CONTRIBUTED SURPLUS 567,949 567,949
WARRANTS 2,797,696 186,704 2,610,992
DEFICIT (37,302,859) -- (37,302,859)
------------ ----------- ------------
535,648 11,000,000 (10,464,352)
------------ ----------- ------------
$ 47,574,828 $11,000,000 $ 36,574,828
============ =========== ============
Note:
(1) - Capital stock is net of share issue costs of CAD $1.3M.
8. Sale of the Convertible Debenture
On March 29, 2005 the Corporation and the purchasers in the Private Placement
Transaction had entered into a binding agreement to purchase the Debenture (in
its amended and restated form) from CIBC. As a result, the Debenture was
reclassified to long-term liabilities in the Corporation's unaudited
consolidated balance sheet as at March 31, 2005.
In connection with this transaction, the Debenture was amended to, among other
things, (i) reduce the interest rate from 11% to 8%, (ii) eliminate all negative
covenants, (iii) eliminate certain positive covenants, (iv) remove certain
events of default and (v) release all security over the assets of Points and its
subsidiaries.
Under the terms of the Debenture, (i) the Debenture is repayable (without
accrued interest, the repayment of which is waived) by the Corporation within 30
days of a change of control of the Corporation resulting from the exercise of
certain warrants issued by the Corporation on April 11, 2003 to Points
Investments, Inc, an affiliate of InterActiveCorp and (ii) the principal amount
of the Debenture will automatically convert into Common Shares immediately
preceding certain liquidity events and, unless previously repaid, will
automatically convert in 18,908,070 common shares in April 2006. Except in
connection with the exercise of the Warrants, Points is not entitled to pre-pay
the Debenture.
9. Issuance of Series Four Preferred Share
In the 2005 investment, Points issued one Series Four Preferred Share for
aggregate cash consideration of $3,454,611. On March 29, 2005 the Corporation
and IAC entered into a binding agreement to issue the Series Four Preferred
Share and the cash was received by the Corporation prior to quarter end. As a
result, the cash and the preferred share are included in the Corporation's
unaudited consolidated balance sheet as at March 31, 2005.
The Series Four Preferred Share is convertible, for no additional consideration,
into 4,504,069 Common Shares. The Series Four Preferred Share contains
anti-dilution protection provisions identical to the Series Two Preferred Share
(see the Corporation's 2004 audited consolidated financial statements for
information with respect to the terms of the Series Two Preferred Share).