Exhibit 99.46
(POINTS INTERNATIONAL LTD LOGO)
POINTS INTERNATIONAL LTD. REPORTS 2004 SECOND QUARTER RESULTS
HIGHLIGHTS INCLUDE 26% REVENUE GROWTH, OVER 5 BILLION
CUMULATIVE POINTS TRANSACTED
TORONTO, AUGUST 10, 2004 - Points International Ltd. (TSX: PTS), operator of the
only independent loyalty program currency exchange - at www.points.com -
reported financial results for the second quarter of 2004.
"Points has continued to be successful in growing our business, improving our
brand recognition and acquiring new partner relationships." noted CEO Rob
MacLean. "Relationships forged in Q2 and early Q3 include premier partners like
Interval International, Starbucks, Frontier Airlines, S&H greenpoints,
KnowledgeFlow, ACCENT Training and Quantum Loyalty Solutions. Adding additional,
world-class partners will continue to expand the breadth of the Points Exchange
and make it a more valuable consumer proposition for a larger audience. Having
recently passed the 5 billion mark of total points transacted, we are pleased
that members of the worlds best loyalty programs are continuing to engage with
our services."
"Once again, our recurring revenues showed another quarter of strong growth.
Points recurring revenues grew by 26% quarter over quarter and by 63% year over
year. Excluding the impact of seasonal products, recurring revenue growth was
65% year over year and 41% quarter over quarter. While expenses grew in the
quarter, much of the increase was attributed to increased marketing expenses
associated with activity growth. Significant resources are being allocated to
further enhance the customer experience at Points.com, and we look forward to
introducing these innovative new services to our database of over 500,000
registered users and the Loyalty industry over the next 12 months."
Second quarter highlights include:
- As at quarter-end, Points has powered the cumulative online exchange,
sale and transfer of 4.9 billion points and miles, up from 3.8 billion
at the end of the first quarter 2004 and 3.0 billion at 2003 year end.
Cumulative points transacted increased to over 5.2 billion in July
2004.
- Points.com activity continued to demonstrate strong growth with 102%
more points exchanged vs. Q1 and 74% more than in the same period in
2003.
- Transaction size exceeded 15,060 points per exchange down from 17,900
in the previous quarter as exchange volume increased.
- Revenue of $2.03 million for the second quarter of 2004 (2003 - $1.46
million), compared with revenue of $1.62 million earned in the first
quarter of 2004. Points' recurring revenues grew by 26% over the first
quarter of 2004.
- General and administrative expenses were $3.10 million for the quarter
(2003 - $1.71 million) and compared with $2.65 million in the first
quarter of 2004. As Points
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continues to accelerate the marketing, branding and consumer
functionality of the Points Exchange, general and administrative
expenses in the third quarter are likely to be higher than the second
quarter of 2004.
- Earnings (loss) before interest, amortization and other deductions
("EBITDA") of ($1.07 million) for the second quarter of 2004 compared
with ($1.03 million) in the prior quarter and ($252,887) for the same
period in 2003.
- The period net loss increased to $2.15 million compared with $1.90
million in the prior quarter. The loss for the previous year was $1.28
million.
- Cash decreased to $18.43 million at quarter end, compared to $24.24
million in the prior quarter. Decreased cash is attributed to payments
for the MilePoint Acquisition, decreased deposits and the period loss
before interest, amortization and other deductions.
Management expects that the third quarter results will be released November 10
or 11, 2004. Additional financial and business metrics will be discussed in the
Corporation's Interim Management's Discussion and Analysis and the unaudited
consolidated financial statements.
ABOUT POINTS INTERNATIONAL LTD.
Points operates the Points Exchange, the only independent loyalty points
exchange - at www.points.com - allowing consumers to exchange points and miles
from one participating loyalty program to another to achieve the rewards they
want faster than ever before. The Points Exchange has to date attracted over 40
partners, including industry leaders eBay (Anything Points), American Airlines (
the AAdvantage program), InterContinental Hotels (Priority Club(R) Rewards), Air
Canada (Aeroplan), US Airways (Dividend Miles), Alaska Airlines, (Mileage Plan),
Delta Air Lines (Sky Miles), Imperial Oil (Esso Extra), Starbucks, Fairmont
Hotels & Resorts, Cathay Pacific Airways (Asia Miles), American West Airlines
(FlightFund), JCPenney, GiftCertificates.com and many more.
Points' shares trade on the TSX under the stock symbol PTS. For more
information, visit www.points.com.
CONTACT:
FOR INVESTOR RELATIONS:
Steve Yuzpe, CFO, Points International
(416) 596-6382, steve.yuzpe@points.com
FOR PARTNERSHIPS AND OTHER INQUIRIES:
Christopher Barnard, President, Points International
(416) 596-6381, christopher.barnard@points.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 INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2004
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POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
AS AT 2004 2003
- ----- ----------- ------------
ASSETS
CURRENT
Cash and cash equivalents 18,427,174 20,274,836
Accounts receivable 1,339,237 1,004,370
Prepaids and sundry assets 1,271,451 825,221
----------- -----------
21,037,862 22,104,427
LONG-TERM INVESTMENTS 161,629 161,629
PROPERTY, PLANT AND EQUIPMENT 1,116,157 513,723
INTANGIBLE ASSETS (Note 7) 8,736,664 1,320,692
DEFERRED COSTS 2,420,745 2,790,816
FUTURE INCOME TAXES RECOVERABLE 590,000 590,000
----------- -----------
13,025,194 5,376,859
$34,063,056 $27,481,286
=========== ===========
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POINTS INTERNATIONAL LTD.
UNAUDITED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
AS AT 2004 2003
- ----- ------------ ------------
LIABILITIES
CURRENT
Accounts payable andaccrued liabilities 931,188 1,187,598
Deposits 14,668,589 10,455,646
Current portion of acquisition loan payable 819,208 --
------------ ------------
16,418,985 11,643,244
ACQUISITION LOAN PAYABLE 765,123 --
CONVERTIBLE DEBENTURE 8,469,055 8,036,372
CONVERTIBLE PREFERRED SHARES 13,458,478 13,024,478
------------ ------------
39,111,640 32,704,094
------------ ------------
SHAREHOLDERS' EQUITY
CAPITAL STOCK 21,983,696 17,728,461
WARRANTS 2,759,390 2,785,737
RETAINED EARNINGS (29,791,670) (25,737,007)
------------ ------------
(5,048,584) (5,222,809)
------------ ------------
$ 34,063,056 $ 27,481,286
============ ============
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POINTS INTERNATIONAL LTD.
UNAUDITED INTERIM CONSOLIDATED
STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE PERIOD ENDED JUNE 30, 2004
6 Month Period 3 Month Period
----------------------------- -----------------------------
Jan-Jun 30/04 Jan-Jun 30/03 Apr-Jun 30/04 Apr-Jun 30/03
------------- ------------- ------------- -------------
REVENUES
Points operations $ 3,481,082 $ 2,626,368 $ 1,948,570 $ 1,342,847
Interest revenue 168,618 135,393 83,566 114,721
------------ ------------ ------------ ------------
3,649,700 2,761,761 2,032,136 1,457,568
GENERAL AND ADMINISTRATION 5,749,749 3,217,177 3,098,792 1,710,455
------------ ------------ ------------ ------------
LOSS- Before interest, amortization and other
deductions (2,100,048) (455,416) (1,066,656) (252,887)
------------ ------------ ------------ ------------
Interest on Convertible Debt 432,683 330,000 225,659 165,000
Interest on Series Two Preferred Share 434,000 190,478 217,000 190,478
Interest and Bank Charges 70,702 6,912 70,441 2,364
Amortization of Capital & Intangible
Assets and Deferred Costs 1,017,229 1,319,019 573,312 672,608
------------ ------------ ------------ ------------
1,954,614 1,846,409 1,086,412 1,030,450
------------ ------------ ------------ ------------
LOSS - From continuing operations (4,054,663) (2,301,825) (2,153,069) (1,283,337)
------------ ------------ ------------ ------------
NET LOSS (4,054,663) (2,301,825) (2,153,069) (1,283,337)
DEFICIT - Beginning of period (25,737,007) (19,200,816) (27,638,601) (20,219,304)
DEFICIT - End of period (29,791,670) (21,502,641) (29,791,670) (21,502,641)
============ ============ ============ ============
LOSS PER SHARE (Note 2) ($0.06) ($0.04) ($0.03) ($0.02)
============ ============ ============ ============
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POINTS INTERNATIONAL LTD.
UNAUDITED INTERIM CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED JUNE 30, 2004
6 Month Period 3 Month Period
------------------------------ -----------------------------
Jan-June 30/04 Jan-Jun 30/03 Apr-Jun 30/04 Apr-Jun 30/03
-------------- ------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(4,054,663) $(2,301,825) $(2,153,069) $(1,283,337)
Items not affecting cash
Amortization of property, plant and equipment 149,061 758,611 92,707 383,440
Amortization of deferred costs 327,472 182,306 128,126 100,116
Amortization of intangible assets 540,696 378,100 352,479 189,050
Cancellation of warrants issued for services (1,167) -- -- --
Interest on Series Two Preferred Shares 434,000 190,478 217,000 190,478
Interest accrued on convertible debenture 432,683 330,000 225,659 165,000
----------- ----------- ----------- -----------
(2,171,918) (462,330) (1,137,098) (255,253)
Changes in non-cash balances related to operations (Note 6 a) 3,182,347 2,766,004 (1,977,032) (646,686)
----------- ----------- ----------- -----------
CASH FLOWS PROVIDED BYOPERATING ACTIVITIES 1,010,429 2,303,674 (3,114,130) (901,939)
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment, net of proceeds (751,495) (121,711) (539,831) (41,764)
Purchase of intangible assets (20,283) (91,962) (3,279) (56,588)
Payments for the acquisition of MilePoint, Inc. (1,900,000) (1,900,000)
Costs related to the acquisition of MilePoint, Inc. (Note 7) (486,385) -- (286,385) --
----------- ----------- ----------- -----------
CASH FLOWS USED IN INVESTING ACTIVITIES (3,158,163) (213,673) (2,729,495) (98,352)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Warrants -- 2,700,000 -- 2,700,000
Issuance of Series Two Preferred Share -- 12,400,000 -- 12,400,000
Deferred financing costs 70,018 (717,048) -- (717,048)
Repayment of obligations under capital leases -- (235,716) -- (120,804)
Issuance of capital stock, net of share issue costs 230,053 817,942 27,568 664,287
----------- ----------- ----------- -----------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 300,071 14,965,178 27,568 14,926,435
----------- ----------- ----------- -----------
INCREASE (DECREASE) IN CASH (1,847,662) 17,055,179 (5,816,057) 13,926,144
CASH AND CASH EQUIVALENTS - Beginning of period 20,274,836 7,341,700 24,243,231 10,470,735
----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS - End of period $18,427,174 $24,396,879 $18,427,174 $24,396,879
=========== =========== =========== ===========
POINTS INTERNATIONAL LTD.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 six months ended June 30,
2004 that amounted to 64,250,018 shares (June 30, 2003 - 55,287,446).
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 June 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: $3,351,765 (June 30, 2003 - $2,598,340) of the
company's revenues were generated in the U.S. for the six 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 six-month period ended June 30, 2004, approximately 51% of the company's
revenues are from its two largest customers (63% at June 30, 2003). In addition,
as at June 30, 2004, 73% of the company's deposits are due to these customers
(64% as at June 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 June 30, 2004, 869,407 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 $173,579 for the six months ended June 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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
2004 2003 2004 2003
----------- --------- ---------- ----------
Decrease (Increase)in accounts receivable $ (452,137) $(458,002) $ (334,867) $ (692,145)
Decrease (Increase)in prepaid and sundry assets (145,784) 36,166 (446,230) (136,596)
Decrease (Increase)in deferred costs (27,420) -- (27,420) --
Increase (Decrease)in accounts payable and accrued liabilities (30,620) 357,722 (256,411) 218,702
Increase (Decrease)in deposits (1,280,895) (582,572) 4,212,942 3,376,043
Increase (Decrease) in liability related to MilePoint, Inc. acquisition (40,176) -- 34,333 --
----------- --------- ---------- ----------
$(1,977,032) $(646,686) $3,182,347 $2,766,004
=========== ========= ========== ==========
b. Supplemental information
Interest and taxes
Interest of $70,702 was paid during the six month period ended June
30, 2004. Interest of $154,354 was received during the six month
period ended June 30, 2004. No income taxes have been paid.
Non-cash transactions
Non-cash transactions for the six months ended June 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) $20,000 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) The Corporation received $80,643 of loyalty currency from a
partner as reimbursement of a portion of the partner's direct
expenses for the services provided by the Corporation.
(v) Interest of $432,683 was accrued on the convertible debenture.
(vi) Interest of $434,000 was accrued on the Series Two Preferred.
c. Cash and cash equivalents consist of:
June 30, December 31,
AS AT 2004 2003
- ----- ----------- ------------
Cash $11,826,968 $ 9,046,701
Short-term investments $ 4,366,931 $ 9,627,468
Cash held by credit card processor $ 2,233,275 $ 1,600,667
----------- -----------
Total $18,427,174 $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 3,450,000
Goodwill 4,261,385
----------
$7,936,385
==========
Consideration:
Cost of Transaction $ 486,385
Capital Stock Issued 4,000,000
Acquisition Loan Payable 3,450,000
----------
$7,936,385
==========
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 $1,584,331
Less: Current Portion 819,208
----------
Long-Term Portion $ 765,123
==========