Exhibit 99.44
(POINTS INTERNATIONAL LTD LOG0)
POINTS INTERNATIONAL LTD. REPORTS 2004 THIRD QUARTER RESULTS
New partner relationships and development of consumer enhancements
position company for growth
TORONTO, NOVEMBER 10, 2004 - Points International Ltd. (TSX: PTS, OTC: PTSEF),
operator of the world's leading reward program management portal - at
www.points.com - reported financial results for the third quarter and nine
months ended September 30, 2004.
The Company reported revenues of $1.98 million in the 2004 third quarter, an
increase of 20% versus $1.65 million during the same period in 2003. New
business established in both the second and third quarters, as well as price
increases for consumer activity implemented at the end of the third quarter,
contributed to the increase in revenue, and are expected to generate revenue
growth in subsequent periods. Points powered the cumulative online exchange,
sale and transfer of 6.5 billion points and miles, up from 5.3 billion at the
end of the third quarter of 2004 and 3.0 billion at 2003 year end.
"Points.com continued its successful strategy of establishing partner
relationships with the world's most important and successful loyalty program
operators," noted CEO Rob MacLean. "New relationships launched or announced in
the third and early fourth quarter include partners such as British Airways,
Prime Hospitality, Goldpoints, Frontier Airlines and Hawaiian Airlines." Several
new partners will be joining Points.com and/or launching additional private
branded solutions with Points.com in the fourth quarter, including the
previously announced relationship with Frontier Airlines. These new partners are
expected to increase the number of transactions we perform and grow traffic
significantly."
In addition to ongoing efforts to establish additional partner relationships,
the third quarter saw the company begin development on the next version of its
consumer experience at the website www.points.com. In the second quarter of
2005, several significant changes to the Points.com consumer experience will be
launched.
The company is working closely with its partners, and industry experts, on the
development of the next version of the Points.com website, which represents a
major enhancement in the relationship with both reward program partners and
consumers. Today, the consumer interacts with a site that centers on a single
feature: Exchange. The new Points.com website will broaden its offerings, and
present each consumer with a personalized view of their reward program universe.
"As a result of this personalized view, Points.com will help consumers realize
more value from their favorite programs, and "Get More Rewards, Faster(TM)".
This is accomplished by adding new mile and point management tools such as ways
to purchase and earn more miles or points in their favorite programs. In
addition, the system will be driven by an Amazon-style associative relevance
suggestion engine that will use the consumer's unique program, reward goals and
point
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balance mix to suggest ways to use the earn, buy and exchange tools to "Get More
Rewards, Faster(TM)", stated Mr. MacLean
The result of these changes is the evolution of Points.com to a "reward
management portal", providing a more comprehensive and engaging consumer
experience.
This reward program management utility will add new revenue streams to the
Points.com business model, including a focus on subscription membership.
Management anticipates accessing significant revenue streams from the additional
functionality on the site.
Investment is well underway, and these changes will be phased in over the course
of 2005, with monthly releases beginning in the second quarter. During the
second quarter, Points.com users will immediately notice a new look and feel,
reflecting the more consumer-focused approach. Over the course of the spring and
summer, Points.com will add purchase, earn, and suggestion functionality. In the
second half of 2005, management will begin driving significant consumer traffic
to the new Points.com website to leverage the site's ongoing evolution.
Third quarter highlights include:
- - Strong recurring revenues, as 92% of Points.com's revenues were recurring.
- - General and administrative expenses were $2.91 million for the quarter, up
from $2.16 million in 2003 and down from $3.10 million in the second
quarter of 2004. As Points continues to enhance the consumer functionality
of Points.com, general and administrative expenses in the fourth quarter
are likely to be marginally higher than the third quarter of 2004.
- - Loss before interest, amortization and other deductions ("EBITDA") was
reduced to ($926,256) for the third quarter of 2004 compared with ($1.07
million) in the prior quarter and ($513,413) for the same period in 2003.
- - The period net loss decreased to ($2.0 million) compared with ($2.15
million) in the prior quarter, and ($1.63 million) for the previous year.
- - Cash was $15.25 million at quarter-end, compared to $18.43 million in the
prior quarter. Decreased cash is attributed to a lower foreign exchange
rate, decreased deposits and the operating loss for the third quarter.
- - As at quarter-end, Points.com's activity continued to demonstrate strong
growth as there was a 186% increase in points transacted versus the year
earlier period. This represented a record level of transactions.
- - The transaction size of each exchange increased to 18,041 points per
exchange, up from 15,663 in the third quarter of 2003, and 15,060 in the
prior quarter.
The company expects that the fourth quarter and year-end results will be
released on or about March 10, 2005.
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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 exchange
points and miles between reward programs so that they can Get More Rewards,
Faster(TM). Points.com has attracted over 40 of the world's most important
reward programs, including industry leaders American Airlines (the AAdvantage(R)
program), Delta Air Lines (SkyMiles(R)), eBay (Anything Points),
InterContinental Hotels (Priority Club(R) Rewards), and Starbucks.
Points' shares trade on the TSX under the stock symbol PTS. For more
information, visit www.points.com.
Contacts:
For investor relations: For partnerships and other inquiries:
Steve Yuzpe, CFO Christopher Barnard, President
(416) 596-6382 (416) 596-6381
steve.yuzpe@points.com christopher.barnard@points.com.
Ed Lewis
CEOcast, Inc. for Points International
(212) 732-4300
elewis@ceocast.com
THE TSX HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE
ADEQUACY OR THE ACCURACY OF THIS RELEASE
ATTACHMENT:
POINTS INTERNATIONAL LTD.
EXCERPTS FROM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2004
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POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
AS AT 2004 2003
- ----- ------------- ------------
ASSETS
CURRENT
Cash and cash equivalents 15,251,307 20,274,836
Accounts receivable 1,196,865 1,004,370
Prepaid and sundry assets 1,228,039 825,221
----------- -----------
17,676,211 22,104,427
LONG-TERM INVESTMENTS 161,629 161,629
PROPERTY, PLANT AND EQUIPMENT 1,700,903 513,723
INTANGIBLE ASSETS 8,705,708 1,320,692
DEFERRED COSTS 2,375,793 2,790,816
FUTURE INCOME TAXES RECOVERABLE 590,000 590,000
----------- -----------
13,534,032 5,376,859
$31,210,243 $27,481,286
=========== ===========
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POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
AS AT 2004 2003
- ----- ------------- ------------
LIABILITIES
CURRENT
Accounts payable and accrued liabilities 1,199,546 1,187,598
Deposits 12,974,925 10,455,646
Current portion of loan payable 29,860 --
Current portion of acquisition loan payable 1,174,921 --
------------ ------------
15,379,252 11,643,244
LOAN PAYABLE 72,163 --
ACQUISITION LOAN PAYABLE 380,118 --
CONVERTIBLE DEBENTURE 8,694,714 8,036,372
CONVERTIBLE PREFERRED SHARES 13,675,478 13,024,478
------------ ------------
38,201,725 32,704,094
------------ ------------
SHAREHOLDERS' EQUITY
CAPITAL STOCK 22,057,996 17,728,461
WARRANTS 2,743,957 2,785,737
RETAINED EARNINGS (31,793,434) (25,737,007)
------------ ------------
(6,991,482) (5,222,809)
------------ ------------
$ 31,210,243 $ 27,481,286
============ ============
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POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS AND DEFICIT
9 Month Period 3 Month Period
----------------------------- -----------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 2004 Jan-Sep 30/04 Jan-Sep 30/03 Jul-Sep 30/04 Jul-Sep 30/03
- --------------------------------------- ------------- ------------- ------------- -------------
REVENUES
Points operations $ 5,426,681 $ 4,166,147 $ 1,945,599 $ 1,539,780
Interest income 201,961 243,179 33,343 107,786
------------ ------------ ------------ ------------
5,628,642 4,409,326 1,978,942 1,647,566
GENERAL AND ADMINISTRATION 8,654,946 5,378,154 2,905,198 2,160,979
------------ ------------ ------------ ------------
LOSS- Before interest, amortization and other
items (3,026,304) (968,828) (926,256) (513,413)
------------ ------------ ------------ ------------
Interest on Convertible Debenture 658,342 495,000 225,659 165,000
Interest on Series Two Preferred Shares 651,000 407,478 217,000 217,000
Interest and Bank Charges 72,448 9,537 1,745 2,625
Amortization of Capital & Intangible Assets
and Deferred Costs 1,648,334 2,049,372 631,105 730,353
------------ ------------ ------------ ------------
3,030,123 2,961,386 1,075,509 1,114,978
============ ============ ============ ============
LOSS (6,056,427) (3,930,215) (2,001,764) (1,628,391)
------------ ------------ ------------ ------------
DEFICIT - Beginning of period (25,737,007) (19,200,816) (29,791,670) (21,502,641)
DEFICIT - End of period (31,793,434) (23,131,031) (31,793,434) (23,131,032)
------------ ------------ ------------ ------------
LOSS PER SHARE (Note 2) ($0.09) ($0.07) ($0.03) ($0.03)
============ ============ ============ ============
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POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS
9 Month Period 3 Month Period
----------------------------- -----------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 2004 Jan-Sep 30/04 Jan-Sep 30/03 Jul-Sep 30/04 Jul-Sep 30/03
- --------------------------------------- ------------- ------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ($6,056,427) ($3,930,215) ($2,001,764) ($1,628,391)
Items not affecting cash
Amortization of property, plant and equipment 229,125 1,162,453 80,064 403,842
Amortization of deferred costs 467,934 319,766 140,461 137,460
Amortization of intangible assets 951,275 567,150 410,579 189,050
Cancellation of warrants issued for services (1,167) -- --
Interest on Series Two Preferred Shares 651,000 407,478 217,000 217,000
Interest accrued on convertible debenture 658,342 495,000 225,659 165,000
------------ ------------ ------------ ------------
(3,099,918) (978,368) (928,001) (516,039)
Changes in non-cash balances related to operations (Note 6 (a)) 1,812,985 778,853 (1,335,031) (1,987,151)
------------ ------------ ------------ ------------
CASH FLOWS USED IN OPERATING ACTIVITIES (1,286,934) (199,515) (2,263,031) (2,503,190)
------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment, net of proceeds (1,416,305) (234,774) (664,810) (113,063)
Purchase of intangible assets (96,646) (118,155) (76,362) (26,193)
Payments for the acquisition of MilePoint, Inc. (1,900,000) --
Costs related to the acquisition of MilePoint, Inc. (Note 7) (784,608) -- (332,554) --
------------ ------------ ------------ ------------
CASH FLOWS USED IN INVESTING ACTIVITIES (4,197,558) (352,929) (1,073,726) (139,256)
------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Warrants -- 2,700,000 -- --
Issuance of Series Two Preferred Share -- 12,400,000 -- --
Loan payable 102,023 -- 102,023 --
Deferred financing costs 70,018 (717,048) -- --
Repayment of obligations under capital leases -- (252,230) -- (16,514)
Issuance of capital stock, net of share issue costs 288,921 913,309 58,867 95,367
------------ ------------ ------------ ------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 460,963 15,044,031 160,890 78,853
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN CASH (5,023,529) 14,491,587 (3,175,867) (2,563,592)
CASH AND CASH EQUIVALENTS - Beginning of period 20,274,836 7,341,700 18,427,174 24,396,879
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS - End of period $ 15,251,307 $ 21,833,287 $ 15,251,307 $ 21,833,287
============ ============ ============ ============
POINTS INTERNATIONAL LTD.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2004
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 2003 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.
b. Goodwill
Goodwill represents the excess of the purchase price of acquired
companies over the estimated fair value of the tangible and intangible
net assets acquired. Goodwill is not amortized. The company currently
compares the carrying amount of the goodwill to the fair value, at
least annually, and recognizes in net income any impairment in value.
c. Intangible assets
Intangible assets represent the fair value of contracts acquired by
the company on MilePoint, Inc, acquisition. The carrying value of
these contracts will be amortized on a straight-line basis over the
life of the contracts.
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 nine months ended
September 30, 2004 that amounted to 65,810,352 shares (September 30,
2003 - 56,773,936).
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 September 30, 2004
and December 31, 2003 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: $5,204,733 (September 30, 2003 - $4,110,915) of the
company's revenues were generated in the U.S. for the nine month period, with
the remaining revenues generated in Canada, Europe and Asia. A significant
majority of the company's assets are located in Canada.
4. Economic dependence
For the nine-month period ended September 30, 2004, approximately 46% of the
company's revenues are from its two largest customers (65% at September 30,
2003). In addition, as at September 30, 2004, 64% of the company's deposits are
due to these customers (59% as at September 30, 2003).
5. Stock-based compensation
Effective January 1, 2002 the company adopted CICA 3870 ("Stock-based
Compensation and Other Stock-based Payments"). As permitted by CICA 3870 the
company has applied this change prospectively for new awards granted on or after
January 1, 2002. The company has chosen to recognize no compensation when stock
options are granted to employees and directors under stock option plans with no
cash settlement features. In periods prior to January 1, 2002 the company
recognized no compensation when stock or stock options were issued to employees.
Supplementary pro forma information regarding net income is required by CICA
3870 as if the company had accounted for its employee stock options granted
after December 31, 2001 under the fair value method.
During the quarter ended September 30, 2004, 510,000 options were issued to
employees. For purposes of pro forma disclosures, the estimated fair value of
the options is amortized to expense over the options' vesting periods. The
company's pro forma net income under Canadian GAAP would be reduced [loss
increased] by approximately $288,290 for the nine months ended September 30,
2004. Loss-per-share figures would not have changed.
6. Statement of Cash Flows
a. Changes in non-cash balances related to operations are as follows:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPT 30, SEPT 30,
------------------------- -----------------------
2004 2003 2004 2003
----------- ----------- ---------- ----------
Decrease (Increase) in accounts receivable $ 142,373 $ 189,234 $ (192,495) $ (502,911)
Decrease (Increase) in prepaid and sundry assets $ 43,411 $ (52,506) $ (402,819) $ (189,090)
Decrease (Increase) in deferred costs $ (95,509) $ (122,929)
Increase (Decrease) in accounts payable and accrued liabilities $ 268,358 $ (346,789) $ 11,948 $ (128,100)
Increase (Decrease) in deposits $(1,693,663) $(1,777,089) $2,519,279 $1,598,953
----------- ----------- ---------- ----------
$(1,335,031) $(1,987,151) $1,812,985 $ 778,852
=========== =========== ========== ==========
b. Supplemental information
Interest and taxes
Interest of $72,488 was paid during the nine month period ended
September 30, 2004. Interest of $194,408 was received during the nine
month period ended September 30, 2004. No income taxes have been paid.
Non-cash transactions
Non-cash transactions for the nine months ended September 30, 2004 are
as follows:
(i) 406,954 shares of Points.com Inc. were acquired in exchange for
1,018,974 shares of the Corporation.
(ii) 4,000,000 shares (valued at $4,000,000) of the Corporation were
issued as part consideration in the acquisition of MilePoint,
Inc. (see Note 7).
(iii) $30,000 of revenue earned for hosting services provided was paid
in loyalty currency. The currency was valued at the purchase
price of the miles. The expense will be recognized as the
currency is used.
(iv) $82,044 of revenue earned for membership fees provided was paid
in one week accommodation certificates. The certificates are
valued at their average cost. The expense will be recognized as
the accommodation certificates are used.
(v) The Corporation received $107,905 of loyalty currency from a
partner as reimbursement of a portion of the partner's direct
expenses for the services provided by the Corporation.
(vi) Interest of $5,062 was accrued on the acquisition of MilePoint,
Inc.
(vii) Interest of $658,342 was accrued on the convertible debenture.
(viii) Interest of $651,000 was accrued on the Series Two Preferred.
c. Cash and cash equivalents consist of:
September 30, December 31,
AS AT 2004 2003
- ----- ------------- ------------
Cash $11,360,089 $ 9,046,701
Short -Term Investments 1,236,162 9,627,468
Cash held by credit card processor 2,655,055 1,600,667
----------- -----------
Total 15,251,307 20,274,836
=========== ===========
7. MilePoint Inc. Acquisition
On March 31, 2004 Points acquired substantially all of the assets of MilePoint,
Inc., a loyalty program technology provider and operator. The purchase price of
$7.5 million was satisfied through a combination of $3.5 million in cash
payable, without interest, over two years and four million common shares.
The cost of the acquisition and the fair values assigned are as follows:
Intangibles $ 225,000
Contracts with Partners 3,455,062
Goodwill 4,559,584
----------
$8,239,646
==========
Consideration:
Cost of Transaction $ 784,584
Capital Stock Issued 4,000,000
Acquisition Loan Payable 3,455,062
----------
$8,239,646
==========
The acquired contracts with partners will be amortized over the life of the
contracts. The goodwill and other intangibles will not be amortized; these will
be reviewed annually and any permanent impairment will be recorded and charged
to income in the year that the impairment has occurred.
The loan payable, which has a face value of $3,500,000, is discounted to its
fair value as it is non interest bearing and due over two years.
8. MilePoint Inc. Acquisition Payments
Remaining payments under the terms of the acquisition loan payable are as
follows:
Acquisition Loan Payable
Current Portion $1,174,921
Long-Term Portion 380,118
Accretion of Interest 44,961
----------
Total $1,600,000
==========