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Planet Payment Announces 2012 Results And Guidance For 2013

(2) In April 2011, the convertible debt holders converted the outstanding principal amount of $9.0 million under convertible notes issued in 2007 and 2008 into an aggregate of 4,049,776 shares of common stock. In addition, we issued 127,318 shares of common stock valued at $0.3 million in lieu of cash payments for accrued interest and 297,682 shares of common stock valued at $0.6 million as a prepayment fee negotiated at the time of conversion. The shares issued for the accrued interest and the prepayment fee were valued at the average closing price of our common stock on AIM under the symbol "PPTR" during the 10 trading day period ending two days prior to the conversion.

(3) In 2003, we entered into an agreement with FHMS and FTB and recorded a liability. Due to a breach of the contractual terms by FHMS and FTB, we did not believe we were liable to repay these amounts. As of March 31, 2011, the statute of limitations had expired on $0.66 million of the $0.7 million balance and as of September 30, 2011, the statute of limitations had expired on the remaining $40,000. For the twelve months ended December 31, 2011, we recorded other income due to the derecognition of the note payable in the amount of $0.7 million.

Table 2. Reconciliation of Prospective Net Income to Adjusted EBITDA
 
For the year ending December 31, 2013
 
  Range
ADJUSTED EBITDA: US$ Millions
   
Net income $2.6 $4.8
Interest expense 0.1 0.1
Interest income 0.0 0.0
Provision for income taxes 0.5 0.7
Depreciation and amortization 3.4 3.4
Stock‑based expense 1.6 1.6
Adjusted EBITDA (non-GAAP) $8.3 $10.6
 
 
Table 3. Explanation of Key Metrics
     
  Year ended December 31,
  2012 2011
KEY METRICS:    
     
Consolidated gross billings(1) $117,945,131 $102,439,474
Total settled dollar volume processed(2) $6,114,241,521 $4,833,375,222
Total active merchant locations    
(at period end)(3) 40,918 27,887
     
Multi-currency processing services key metrics:    
Active merchant locations (at period end)(3) 22,015 16,347
     
Settled transactions processed(4) 11,883,366 10,801,177
Gross foreign currency mark-up(5) $103,174,205 $87,820,070
Settled dollar volume processed(6) $2,628,252,265 $2,339,615,142
Average net mark-up percentage on settled     
dollar volume processed(7) 1.10% 1.16%
     
Payment processing services key metrics:    
Active merchant locations (at period end)(3) 18,921 11,552
Payment processing services revenue(8) $14,770,926 $14,619,404
Settled transactions processed(9)  34,084,805 20,176,344
Settled dollar volume processed(10) $3,485,989,256 $2,493,760,080
 
(1) Represents gross foreign currency mark-up plus payment processing services revenue.
(2) Represents total settled dollar volume processed through both our multi-currency and payment processing services.
(3) We consider a merchant location to be active as of a date if the merchant completed at least one revenue-generating transaction at the location during the 90-day period ending on such date. The total number of active merchant locations exceeds the total number of merchants, as merchants may have multiple locations. As of December 31, 2012 and 2011 and 2010, there were 18 and 12 active merchant locations, respectively, that used both our multi-currency processing services and our payment processing services. These amounts are included in multi-currency and payment processing active merchant locations but are not included in total active merchant locations.
(4) Represents settled transactions processed using our multi-currency processing services.
(5) Represents the gross foreign currency mark-up amount on settled dollar volume processed using our multi-currency processing services. Gross foreign currency mark-up represents multi-currency processing services net revenue plus amounts paid to acquiring banks and their merchants associated with such multi-currency processing transactions. Management believes this metric is relevant because it provides the reader an indication of the gross mark-up derived from multi-currency transactions processed through our platform during a given period. 
(6) Represents the total settled dollar volume processed using our multi-currency processing services.
(7) Represents the average net mark-up percentage earned on settled dollar volume processed using our multi-currency processing services. The average net mark-up percentage on settled dollar volume processed is calculated by taking the reported total multi-currency processing services net revenue ($28.8 million, and $27.2 million for the years ended December 31, 2012 and 2011, respectively) and dividing by settled dollar volume processed.
(8) Represents revenue earned and reported on payment processing services.
(9) Represents settled transactions processed using our payment processing services.
(10) Represents the total settled dollar volume processed using our payment processing services.

Planet Payment, Inc. unaudited consolidated balance sheets

  December 31,
  2012 2011
     
Current assets:    
Cash and cash equivalents $6,002,457 $7,671,963
Restricted cash 2,517,616 1,941,909
Accounts receivable, net of allowances of $1.5 million and $1.4 million, respectively, as of December 31, 2012 and 2011 5,585,815 4,768,040
Prepaid expenses and other assets 2,395,137 947,043
Total current assets 16,501,025 15,328,955
Other assets:    
Restricted cash 669,406 659,958
Property and equipment, net 1,396,154 1,223,562
Software development costs, net 4,776,320 4,978,002
Intangible assets, net 3,289,590 799,648
Goodwill 347,599
Security deposits and other assets 338,408 213,230
Deferred IPO costs 1,650,789
Total other assets 10,817,477 9,525,189
Total assets $27,318,502 $24,854,144
Liabilities and stockholders' equity    
Current liabilities:    
Accounts payable $889,118 $993,872
Accrued expenses 5,298,789 2,482,255
Due to merchants 2,546,140 2,137,064
Current portion of capital leases 337,588 247,257
Total current liabilities 9,071,635 5,860,448
Long-term liabilities:    
Long-term portion of capital leases and other long-term liabilities 364,010 248,730
Total long-term liabilities 364,010 248,730
Total liabilities 9,435,645 6,109,178
Commitments and contingencies    
Stockholders' equity:    
Convertible preferred stock—10,000,000 shares authorized as of December 31, 2012 and 4,000,000 shares authorized as of December 31, 2011, $0.01 par value: Series A—2,243,750 issued and outstanding as of December 31, 2012 and 2011; $8,975,000 aggregate liquidation preference 22,438 22,438
Common stock—250,000,000 shares authorized as of December 31, 2012 and 80,000,000 shares authorized as of December 31, 2011, $0.01 par value, and 53,658,857 and 51,764,405 shares issued and outstanding as of December 31, 2012 and 2011, respectively 536,589 517,644
Additional paid-in capital 97,576,498 94,083,901
Warrants 1,622,651 1,622,651
Accumulated other comprehensive gain (loss) 37,925 (40,729)
Accumulated deficit (81,913,244) (77,460,939)
Total stockholders' equity 17,882,857 18,744,966
Total liabilities and stockholders' equity $27,318,502 $24,854,144

Planet Payment, Inc. unaudited consolidated statements of operations

  Year ended December 31,
  2012 2011 2010
       
Revenue:      
Net revenue $43,578,016 $41,858,166 $30,553,164
Operating expenses:      
Cost of revenue:      
Payment processing service fees 10,943,290 11,677,012 10,051,640
Processing and service costs 11,010,778 9,093,674 6,980,981
Software licenses impairment 1,108,514
Total cost of revenue 21,954,068 20,770,686 18,141,135
Selling, general and administrative expenses 25,865,652 18,152,014 14,304,448
Total operating expenses 47,819,720 38,922,700 32,445,583
(Loss) income from operations (4,241,704) 2,935,466 (1,892,419)
Other (expense) income:      
Interest expense (55,987) (319,098) (1,169,578)
Interest income 1,236 1,582 429
Other (expense) income, net (8,739) 98,682
Total other expense, net (63,490) (218,834) (1,169,149)
(Loss) income from operations before provision for income taxes (4,305,194) 2,716,632 (3,061,568)
Provision for income taxes (147,111) (331,903) (3,219)
Net (loss) income $(4,452,305) $2,384,729 $(3,064,787)
Basic net (loss) income per share applicable to common stockholders $(0.09) $0.04 $(0.08)
Diluted net (loss) income per share applicable to common stockholders $(0.09) $0.04 $(0.08)
Weighted average common stock outstanding (basic) 52,187,144 49,348,033 40,431,073
Weighted average common stock outstanding (diluted) 52,187,144 52,167,492 40,431,073

Planet Payment, Inc. unaudited consolidated statements of cash flows

  Year ended December 31,
  2012 2011 2010
       
Cash flows from operating activities:      
Net (loss) income $(4,452,305) $2,384,729 $(3,064,787)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:      
Stock-based expense 1,075,079 555,882 739,992
Depreciation and amortization expense 2,831,379 2,416,873 1,769,650
Provision (recovery) for doubtful accounts 136,350 75,384 (36,703)
Deferred tax liability (66,009)
Disposal of property and equipment 86,388
Expensing of deferred IPO costs 2,346,210
Software license impairment charge 1,108,514
Accrued insurance proceeds (100,000)
Non-cash interest expense on convertible debt  254,636 808,193
Non-cash interest expense on term debt 295,743
Warrant expense 14,928 89,741
Common stock issued for payment of account payable 20,000
Derecognition of note payable (700,000)
Non-cash prepayment fee on conversion of convertible debt 601,318
Changes in operating assets and liabilities net of effects of acquisitions:      
(Increase) decrease in settlement assets (575,707) 118,448 (46,859)
Increase in accounts receivables, prepaid expenses and other current assets (1,725,523) (1,825,403) (1,787,798)
Increase in software licenses (80,209)
(Increase) decrease in security deposits and other assets (11,575) 32,051 52,247
Increase in accounts payable and accrued expenses 1,713,071 2,088,190 231,768
Increase (decrease) in due to merchants 409,076 (157,188) 201,103
Other (65,018) (13,128) (1)
Net cash provided by operating activities  1,601,416 5,866,720 280,594
Cash flows from investing activities:      
(Increase) decrease in restricted cash (9,448) 90,042
Purchase of property and equipment (269,557) (161,705) (300,540)
Capitalized software development (1,360,091) (1,862,653) (1,970,349)
Purchase of intangible assets (149,420) (78,453) (79,618)
Cash paid for business combination, net of cash acquired (1,577,829)
Net cash used in investing activities (3,366,345) (2,012,769) (2,350,507)
Cash flows from financing activities:      
Proceeds from issuance of common stock. 774,749 269,965 6,058,702
Principal payments on capital lease obligations  (324,795) (284,682) (187,144)
Payment of capital-raising expense (343,969)
Repayment of long-term debt (2,000,000)
Payment of IPO costs (354,531) (1,349,770)
Net cash provided by (used in) financing activities 95,423 (1,364,487) 3,527,589
Effect of exchange rate changes on cash and cash equivalents(*) (27,600)
Net (decrease) increase in cash and cash equivalents (1,669,506) 2,489,464 1,430,076
Beginning of period 7,671,963 5,182,499 3,752,423
End of period $6,002,457 $7,671,963 $5,182,499
Supplemental disclosure:      
Cash paid for:      
Interest $53,994 $64,462 $ 65,642
Income taxes 541,933 233,535 142
Non cash investing and financing activities:      
Convertible debt converted to common stock $— $8,979,926 $—
Common stock issued to pay accrued interest 1,103,936
Common stock issued for BPS acquisition 1,596,862
Common stock issued for stock options and warrants exercised 13,335 354 19,661
Assets acquired under capital leases 530,984 349,484 223,965
Common stock issued for warrants exercised 2,000,000
Reduction of long-term debt through exercise of warrants (2,000,000)
Accrued IPO costs 301,019
 
(*) For the year ended December 31, 2012 and 2011, the effect of exchange rate changes on cash and cash equivalents was inconsequential.  

Planet Payment, Inc. unaudited consolidated statements of changes in convertible preferred stock and stockholders' (deficit) equity

  Convertible preferred stock $0.01 par value 4,000,000 shares authorized as of December 31, 2009, 2010 and 2011 and 10,000,000 shares authorized as of December 31, 2012 Series A Common stock $0.01 par value— 70,000,000 shares authorized as of December 31, 2009 and 2010,  80,000,000 shares authorized as of          
      December 31, 2011 and 250,000,000           
      shares     Accumulated    
      authorized as of Additional   other   Total
  Shares Shares par December 31, 2012 paid-In   comprehensive Accumulated stockholders'
  issued Value Issued Par value capital Warrants loss deficit (deficit) equity
Balance—December 31, 2009 2,243,750 $22,438 39,170,213 $391,701 $ 73,969,455 $1,517,982 $ — $(76,780,881) $(879,305)
Stock issued 5,357,897 53,579 6,765,090 6,818,669
Warrant exercised 1,526,718 15,267 1,984,733 2,000,000
Options exercised 13,668 137 (137)
Warrant expense 89,741 89,741
Stock-based expense 739,992 739,992
  Cumulative translation adjustment (27,600) (27,600)
Net loss (3,064,787) (3,064,787)
Balance—December 31, 2010 2,243,750 22,438 46,068,496 460,684 83,459,133 1,607,723 (27,600) (79,845,668) 5,676,710
Stock issued 4,484,776 44,848 9,811,033 9,855,881
Restricted stock issued 915,000 9,150     9,150
Warrants exercised 28,560 286 (286)
Options exercised 267,573 2,676 258,139 260,815
Warrant expense 14,928 14,928
Stock-based expense 555,882 555,882
Cumulative translation adjustment (13,129) (13,129)
Net income 2,384,729 2,384,729
Balance—December 31, 2011 2,243,750 22,438 51,764,405 517,644 94,083,901 1,622,651 (40,729) (77,460,939) 18,744,966
Options exercised 488,513 4,885 769,864 774,749
Issuance of common shares—Acquisition of BPS 488,337 4,884 1,596,862 1,601,746
Stock-based expense 1,135,047 1,135,047
Warrants exercised 917,602 9,176 (9,176)
Cumulative translation adjustment 78,654 78,654
Net loss (4,452,305) (4,452,305)
Balance— December 31, 2012 2,243,750 $22,438 53,658,857 $536,589 $97,576,498 $1,622,651 $37,925 $(81,913,244) $17,882,857
CONTACT: Planet Payment, Inc.
         Robert Cox (CFO)
         Tel: + 1 516 670 3200
         www.planetpayment.com
         
         Redleaf Polhill (UK PR for Planet Payment)
         Emma Kane / Henry Columbine / David Ison
         Tel: +44 207 382 4730
         planet@redleafpolhill.com
         
         ICR (USA IR for Planet Payment)
         Don Duffy / Dara Dierks
         Tel: +1 646-277-1212
         
         Canaccord Genuity Ltd (UK) (Nomad for Planet Payment)
         Simon Bridges / Andrew Chubb
         Tel: +44 20 7523 8000

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