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Calpian, Inc. Releases 2014 Annual Report – Files 10KT with SEC

Calpian, Inc. (OTCQB: CLPI), a global mobile payments technology and processing company, today released the company’s 2014 Annual Report for the fiscal year ending March 31, 2014, including for the first time the consolidation of the company’s Indian subsidiary Money-On-Mobile which had previously been reported as an investment.

"Our company has continued to grow and we have strong opportunities ahead as we expand both domestically and in India through Money-On-Mobile," said Harold Montgomery, Calpian founder and CEO.

Annual 2014 and Fourth Quarter 2014 Financial Summary

    Year Ended March 31      

Three Months Ended March 31

In millions, except percentages and per share amounts 2014     2013 2014     2013
 
Revenue $ 54.9 $ 4.4 $ 35.6 $ 1.8
Income from Operations
GAAP $ (5.0 ) $ (0.7 ) $ (2.9 ) $ (0.3 )
Non-GAAP $ 0.9 N/A $ (0.7 ) N/A
Operating Margin
GAAP $ 7.6 $ 2.6 $ 2.1 $ 0.8
GAAP 13.8 % 59.7 % 6.0 % 44.0 %
Comprehensive Net Income
GAAP $ (6.0 ) $ (4.2 ) $ 2.2 $ (0.8 )
Non-GAAP $ (2.3 ) N/A $ (1.6 ) N/A
Diluted Earnings per Share (EPS)
GAAP $ (0.25 ) $ (0.19 ) $ 0.04 $ (0.03 )
Non-GAAP $ (0.07 ) N/A $ (0.04 ) N/A
 

Revenues – Consolidated revenues were $54.9 million for the year ending March 31, 2014. Revenues included only the fourth quarter of Money-On-Mobile which contributed $29.7 million. Revenues also included a full year of revenue from Calpian Commerce which was acquired in March 2013 and contributed $21.4 million of the total.

Revenue In India – Money-On-Mobile revenues were 8.97 billion Indian rupees for the full year ending March 31, 2014. However, as Calpian only achieved majority ownership in the fiscal fourth quarter, only the fourth quarter’s revenues were consolidated in Calpian’s financial results. (Note: the Indian Rupee to U.S. Dollar exchange rate on March 31, 2014 was USD$1: INR 61.2).

Domestic Revenue in the U.S. – Domestic revenues were $25.5 million for the year ending March 31, 2014. Revenues included a full year of revenue from Calpian Commerce which was acquired in March of 2013 and contributed $21.4 million of the total.

Income from Operations – Income from operations was a loss of $5.0 million for the year ending March 31, 2014 which generally reflects the Company’s objectives to increase revenues as statement above, raise capital and build our businesses. The losses include a number of one-time costs further described below. The loss for the year ending March 31, 2014 included a full year of results from Calpian Commerce which was acquired in March of 2013, and contributed a $446,000 operating profit to the total. The 2014 loss also included one quarter of results from Money-On-Mobile, which added $839,000 in operating losses to the total.

Income from Operations in the U.S. – Domestic Income from operations for 2014 was a loss of $4.8 million to which Calpian Commerce contributed an operating profit of $446,000.

Income from Operations in India – Money-On-Mobile’s loss from operations was $839,000 or 51.3 million Indian rupees for the fourth quarter of fiscal 2014 included in the consolidated results of Calpian for the first time.

Non-GAAP Income from Operations – Non-GAAP Income from operations was a gain of $851,000 for the year ending March 31, 2014. In management’s opinion, the prior fiscal year is not comparable on a non-GAAP basis. Non-GAAP Income from operations for the full fiscal year of 2014 includes an adjustment of $2.6 million for one-time costs associated with fundraising (including commissions), a $509,000 adjustment for one-time legal and settlement costs, and a one-time $403,000 charge for office consolidation and restructuring at Calpian Commerce, as well as $2.3 million in residual portfolio amortization. Non-GAAP Income from operations for the quarter ending March 31, 2014 was a loss of $905,000. In management’s opinion, the prior fiscal quarter in not comparable on a non-GAAP basis. Non-GAAP Income from operations for the fourth quarter of 2014 includes an adjustment of $1.4 million for one-time costs associated with fundraising (including commissions), as well as $818,000 in residual portfolio amortization.

Operating Margin – Changes in the Consolidated Operating Margin are primarily driven by the changes in the proportional mix of the Company’s businesses. In the United States, these changes are the residual acquisition business and Calpian Commerce, and in India, Money-On-Mobile. The Operating Margin of 6% for the quarter ending March 31, 2014 is the most representative of the Company’s current business mix as the lower margin Money-On-Mobile business revenues continue to grow and become a progressively large portion of the total. On a dollar basis, the operating margin more than doubled year over year reflecting the Company’s aggressive growth strategy.

Operating Margin in the U.S. – The total dollar margin was $7.6 million for the year ended March 31, 2014, up $5.0 million for the year from $2.6 million in the prior year. However, the margin percentage declined from 60% in 2013 to 28% in 2014. Both changes are the result of adding the Calpian Commerce, a lower margin operating business, to the higher margin residual acquisition business.

Operating Margin in India – As previously referenced, Money-On-Mobile results were only consolidated for the fourth quarter of 2014. For the one quarter included, Money-On-Mobile contributed $508,000 to the total gross margin in 2014, a margin of 1.71% of revenues.

Net Income – Comprehensive Net Income was a loss of $6.0 million for the year ending March 31, 2014 as compared with $4.2 million for the prior year. Comprehensive Net Income for the quarter ending March 31, 2014 was a gain of $2.2 million. These results include the effects of reflecting Money-On-Mobile as a subsidiary of Calpian, Inc. for the first time. In prior reporting, Money-On-Mobile was reflected as an investment.

Non-GAAP Net Income – Non-GAAP Comprehensive Net Income is Non-GAAP Income from Operations plus interest expense. Management feels that the majority of interest expense incurred supports the domestic residual acquisition business, which is an inherent part of that business and thus should be included when considering Non-GAAP Net Income.

Diluted Earnings per Share (EPS) – Earnings per share was a loss of 25 cents per share for the year ended March 31, 2014 compared to a loss of 19 cents per share for the prior year. In the quarter ended March 31, 2014, earnings per share were 4 cents per share compared to a loss of 3 cents per share in the quarter ended March 31, 2013.

Non-GAAP Diluted Earnings per Share (EPS) – Non-GAAP Earnings per share was a loss of 7 cents per share for the year ended March 31, 2014. In the quarter ended March 31, 2014, Non-GAAP earnings per share were a loss of 4 cents per share. These Non-GAAP earnings per share reflect the adjustments previously referenced, plus the elimination of the non-controlling interest which is not attributable to Calpian shareholders.

Assets – Consolidated assets were $48.1 million for the year ending March 31, 2014. Assets included $10.1 million of Calpian Commerce assets and $15.9 in Money-On-Mobile assets. Also included in consolidated assets is Calpian’s history-to-date invested capital in the Money-On-Mobile enterprise added to the consolidated balance sheet as part of the conversion from the investment accounting method to the equity accounting method when Calpian acquired majority control.

Equity – Total equity was $23.4 million for the year ending March 31, 2014, including the reversal of previously passed through losses from the investment in Money-On-Mobile, which are now reflected as part of the company’s investment in the Money-On-Mobile enterprise as shown in the consolidated assets of Calpian.

Cash – Calpian concluded the 2014 fiscal year with a partial closing of an equity raise led by National Securities on March 31, 2014 that was a primary driver of the company’s increase in cash to $8.0 million at year end.

"The change in fiscal year to March 31 and requisite audit of all our balances, both domestically and abroad, has been a major undertaking, but one we’ve executed efficiently and cost effectively without any substantive adjustments to previously reported balances. Calpian is now well positioned to move forward with timely financial reports that fulfill reporting requirements in the U.S. and India with a single annual audit in time periods that will be easy for our shareholders to interpret," said Scott Arey, Calpian’s Chief Financial Officer.

The financial information discussed herein does not purport to be complete and is qualified in its entirety by reference to and should be read together with financial statements and related notes appearing in the Annual Report on Form 10-K filed on August 11, 2014.

About Calpian, Inc.

Calpian, Inc. (CLPI) is a global mobile payments technology and processing company offering mobile payment services through Indian subsidiary Money-On-Mobile and domestic transaction services through Calpian Commerce. Money-On-Mobile is a mobile payments service provider that enables Indian consumers to use their mobile phones to pay for goods and services, or transfer funds from one cell phone to another using simple SMS text functionality. Calpian Commerce provides the U.S. merchant community with an integrated suite of payment processing services and related software products. For more information, visit www.calpian.com.

Note to Investors:

This press release contains certain forward-looking statements based on our current expectations, forecasts and assumptions that involve risks and uncertainties. This release does not constitute an offer to sell or a solicitation of offers to buy any securities of any entity. Forward-looking statements in this release are based on information available to us as of the date hereof. Our actual results may differ materially from those stated or implied in such forward-looking statements, due to risks and uncertainties associated with our business, which include the risk factors disclosed in our Form 10-K filed on August 11, 2014. Forward-looking statements include statements regarding our expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," and "would" or similar words. We assume no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise. Any forecasts that are provided by management in this presentation and are based on information available to us at this time and management expects that internal projections and expectations may change over time. In addition, the forecasts are entirely on management’s best estimate of our future financial performance given our current contracts, current backlog of opportunities and conversations with new and existing customers about our products.

                 
CALPIAN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In dollars, except for per share amounts)

(Audited)

 
Year Ended Three Months Ended
March 31, March 31,
2014     2013       2014     2013
 
Revenues
Residual portfolios $ 3,777,484 $ 3,411,029 $ 868,197 $ 849,715
Processing fees 19,304,740 895,334 4,521,225 875,413
Money-on-Mobile 29,710,288 - 29,710,288 -
Other   2,095,721         57,906           485,440         50,686  
Total revenues 54,888,233 4,364,269 35,585,150 1,775,814
Cost of revenues
Residual portfolio amortization 1,192,360 1,037,171 264,486 294,138
Processing and servicing 15,994,696 710,347 3,771,099 690,425
Money-on-Mobile 29,202,360 - 29,202,360 -
Other   940,107         9,658           228,552         9,658  
Total cost of revenues   47,329,523         1,757,176           33,466,497         994,221  
Gross profit 7,558,710 2,607,093 2,118,653 781,593
 
General and administrative expenses
Salaries and wages 3,525,464 1,088,864 1,236,682 275,180
Selling, general and administrative 8,810,547 2,248,264 3,621,769 795,043
Depreciation and amortization   227,321         8,298           136,981         8,298  
Total general and administrative   12,563,332         3,345,426           4,995,432         1,078,521  
Operating loss (5,004,622 ) (738,333 ) (2,876,779 ) (296,928 )
 
Other income / (expenses)
Interest expense (3,147,567 ) (2,632,931 ) (906,957 ) (413,864 )
Equity investment gain / (loss) 1,191,374 (822,143 ) 5,014,565 (103,981 )
Gain/ (loss) on sale of assets   1,761         -           1,761         -  
Total other income/(expenses) (1,954,432 ) (3,455,074 ) 4,109,369 (517,845 )
Net income (loss) before income taxes (6,959,054 ) (4,193,407 ) 1,232,590 (814,773 )
 
Income tax expense (benefit) - - - -
                     
Net income (loss) (6,959,054 ) (4,193,407 ) 1,232,590 (814,773 )
 
Net loss attributable to noncontrolling interest   (366,988 )       -           (366,988 )       -  
Net loss attributable to Calpian, Inc. shareholders   (6,592,066 )       (4,193,407 )         1,599,578         (814,773 )
 
Other comprehensive income (loss):
Currency translation adjustments   1,000,502         -           1,000,502         2,985  
Total comprehensive income (loss) $ (5,958,552 )     $ (4,193,407 )       $ 2,233,092       $ (811,788 )
 
Comprehensive income (loss) attributable to:
Noncontrolling interest (213,879 ) - (213,879 ) -
Calpian, Inc. shareholders 6,172,431 (4,193,407 ) 2,423,935 (814,773 )
 
Net loss per share, basic and diluted $ (0.25 ) $ (0.19 ) $ 0.04 $ (0.03 )
Weighted average number of shares outstanding, basic and diluted 28,234,061 22,640,735 30,604,684 23,907,639
 
       
CALPIAN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(In dollars)

(Audited)

 
March 31, 2014 March 31, 2013
ASSETS
 
Current Assets
Cash and equivalents $ 8,078,505 $ 585,717
Accounts receivable 1,194,117 459,467
Restricted cash 52,994 56,967
Inventory 2,997,872 24,999
Other current assets   1,758,270     322,338  
Total current assets 14,081,758 1,449,488
Property and equipment 398,958 183,963
Residual portfolios 9,095,133 11,328,992
Equity investment - Money-on-Mobile - 8,291,207
Other equity investments 301,680 -
Deferred financing costs 324,126 540,210
Goodwill 21,619,870 2,341,928
Other intangible assets, at cost 1,351,965 184,948
Other non-current assets   958,196     421,000  
Total assets $ 48,131,686   $ 24,741,736  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current Liabilities
Accounts payable $ 985,616 $ 116,765
Accrued liabilities 1,594,743 577,921
Related party payables 725,286 393,589
Current portion of long-term debt 7,260,800 1,100,000
Deferred revenues   595,929     -  
Total current liabilities 11,162,374 2,188,275
Long-term debt 13,374,296 17,159,220
Other non-current   214,836     -  
Total liabilities 24,751,506 19,347,495
 
Shareholders' Equity
Preferred stock 1,000,000 -
Common stock 29,022 23,916
Stock subscribed 7,056 -
Additional paid-in capital 29,494,797 14,159,576
Accumulated deficit (15,382,512 ) (8,790,446 )
Noncontrolling interest 7,230,120 -
Cumulative other comprehensive income   1,001,697     1,195  
Total shareholders' equity   23,380,180     5,394,241  
Total liabilities and shareholders' equity $ 48,131,686   $ 24,741,736  
 
                 
CALPIAN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In dollars)

(Audited)

 
Year Ended Three Months Ended
March 31, March 31,
2014 2013 2014 2013
Operating Activities
 
Net income (loss) (6,959,054 ) (4,193,407 ) 1,232,590 (814,773 )
 
Equity investment loss (income) (1,191,374 ) 822,143 (5,002,355 ) 156,184
Deferred financing cost amortization 216,084 1,518,310 (92,074 ) 332,915
Residual portfolio amortization 2,248,740 929,207 514,794 303,599
Subordinated note discount amortization 423,529 373,039 175,473 78,918
Depreciation and amortization 208,555 8,298 160,822 8,298
Impairment of intangible assets 61,500 - 61,500 -
Stock-based compensation 360,005 2,680 29,284 -
Equity awards issued for services 458,124 456,000 446,995 -
Loss on disposal of property and equipment 8,635 - - -
Changes in operating assets and liabilities:
Accounts receivable 302,163 (321,057 ) (85,748 ) (316,539 )
Inventory (823,021 ) (24,999 ) (816,605 ) (24,999 )
Other assets 1,177,116 (442,428 ) 1,505,541 (123,674 )
Related party payables 331,697 393,589 5,013 (1,412 )
Accounts payable 228,442 (188,185 ) (31,596 ) 65,540
Accrued liabilities 664,420 (140,319 ) 429,394 295,793
Deferred revenue 576,814 - 576,814 -
Other liabilities (1,969,973 ) -   (1,993,769 ) 4,085  
Net cash provided by (used in) operating activities (3,677,598 ) (807,129 ) (2,883,927 ) (36,065 )
 
Investing Activities
Business acquisition, net of cash acquired 301,341 250,000 301,341 250,000
Investment in equity method - Money-on-Mobile (4,324,060 ) (4,216,000 ) (212,210 ) (1,437,203 )
Investment in MoM post-acquisition (eliminate) - - - -
Contribution to equity method investments (90,000 ) - (90,000 ) -
Purchases of property and equipment (242,496 ) (12,759 ) (61,482 ) (12,759 )
Acquisition of intangible assets (52,054 ) - (52,054 ) -
       
Net cash (used in) provided by investing activities (4,407,269 ) (3,978,759 ) (114,405 ) (1,199,962 )
 
Financing Activities
Borrowings on senior notes 3,000,050 720,000 3,000,050 420,000
Borrowings on subordinated notes 300,000 4,650,000 - 1,650,000
Payment on note payble -

 

(1,303,075 )

 

- (7,570 )
Issuance of common stock and warrants 10,631,646 1,740,006 6,554,399 35,005
Issuance of Series B Preferred stock 550,951 - - -
Issuance of Series C Stock 1,000,000 17 1,000,000 -
Payments on deferred financing fees - - - (860,000 )
Change in restricted cash 3,973 (860,000 ) (43,170 ) -
Payments on deferred financing fees - - - -
Contributions made by non-controlling interest 97,108 - 97,108 -
       
Net cash provided by financing activities 15,583,728   4,946,948   10,608,387   1,237,435  
 
Foreign currency effect on cash flows (6,073 ) - (4,916 )

-

       
Net change in cash and cash equivalents 7,492,788 161,060 7,605,138 1,408
Cash and cash equivalents at beginning of year 585,717   424,674   473,367     584,309  
Cash and cash equivalents at end of period 8,078,505   585,734   8,078,505     585,717  
 
SUPPLEMENTAL INFORMATION
Common stock issued to acquire equity investment 1,504,074 3,646,155 - -
Common stock issued as stock-based compensation for equity awards and services - - - -
Stock and warrants for services - - - -
Common stock issued in exchange for residual portfolios 14,880 15,000 - -
Warrants issued as part of debt and equity financings 392 490,434 - 421,436
Subordinated debt converted to common stock 1,050,703 - 100,000 -
Issuance of warrants with debt 297,000 - 297,000 -
Series B preferred stock converted to common stock 550 - - -
 

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