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Global Axcess Corp Announces First Quarter 2010 Financial Results
May 04, 2010 (04:05 PM EDT)


JACKSONVILLE, Fla., May 4 /PRNewswire-FirstCall/ -- Global Axcess Corp (OTC Bulletin Board: GAXC; the "Company"), an independent provider of self-service kiosk solutions, today announced the financial results for the first quarter ended March 31, 2010.

Financial highlights for the quarter ended March 31, 2010 included:

Revenue

$5.4 million

Gross profit %

46.9%

EBITDA from continuing operations (See Reconciliation)

$949,000

Income from continuing operations

$440,000

Net income

$319,000

Diluted EBITDA per share

$0.04

Diluted earnings per share

$0.01



Mr. George McQuain, Chief Executive Officer of the Company, stated, "We are pleased to report another profitable quarter, once again validating our business plan and demonstrating the financial strength of the company. We achieved this profit despite the weather-related slowdown in ATM usage in our operating footprint and the accelerating investment in our DVD kiosk initiative. Despite the severe weather issues, our ATM transactions increased 2% over the first quarter of 2009 and 4% over the fourth quarter of 2009. We experienced lower non-transactional revenue such as ATM sales and cash management fees during the quarter which caused our first quarter revenue to be flat year over year."

Mr. McQuain continued, "The investments in our DVD kiosk initiative have begun paying off, as demonstrated by the recent announcement that we have signed a three-year agreement with a major grocery chain. The estimated $7 million per year in revenue from this agreement equates to more than 30% growth over our total 2009 revenues. We expect to roll out the DVD program beginning in July 2010, with a target completion of the end of the third quarter. We will deploy 300 new DVD rental kiosk locations at the outset, and this can grow by 20% or more within the contract time frame. We anticipate revenue of approximately $2.5 to $3 million from this agreement during 2010. The grocery chain has been an ATM client of the Company and due to our operational excellence and other core competencies, we unseated the incumbent."

First Quarter 2010 Financial Results

The Company reported revenues from continuing operations of $5.4 million for the three-month period ended March 31, 2010 essentially flat compared to $5.4 million for the three-month period ended March 31, 2009. Gross profit from continuing operations was $2.5 million, or 46.9% gross margin, for the first quarter 2010 compared to $2.6 million, or 47.3% gross margin, for the same period of 2009. The Company experienced a slight increase in cost of revenues related to cash replenishment activities that were impacted by the severe winter weather.

Operating expenses for the first quarter ended March 31, 2010 increased 16.9% to $2.1 million from $1.8 million in the same period of 2009. This increase primarily resulted from higher SG&A and depreciation expenses. During the first quarter of 2010, the Company hired consultants and employees with industry expertise to spearhead efforts in its DVD rental kiosk initiative. These expenses and other expenses related to the DVD kiosk initiative were the largest single component, contributing approximately $94,000 or 40% of the increase in SG&A expenses. Depreciation expense increased due to increased ATM and DVD kiosks purchased during 2009 to support new business in both business lines.

Income from continuing operations was $439,899 for the quarter ended March 31, 2010 compared to $776,770 in the same period of 2009. During the first quarter of 2010, the Company recorded net interest expense of $121,331 compared to net interest expense of $212,617 for the same period in 2009. The decrease was mainly due to a decrease in debt balances and refinancing the debt to a lower interest rate. EBITDA (earnings before net interest, taxes, depreciation and amortization) for the first quarter of 2010 was $949,126, compared to $772,490 in the first quarter of 2009. Adjusted EBITDA (EBITDA before stock compensation expenses and loss on early extinguishment of debt) was $996,281 for the first quarter of 2010 from $1.3 million for the first quarter of 2009. EBITDA represents a non-GAAP (Generally Accepted Accounting Principles) financial measure. A table reconciling this measure to the appropriate GAAP measure is included in this release.

Net income for the first quarter ended March 31, 2010 was $318,568, or $0.02 and $0.01 per basic and diluted share, respectively (based on 21.9 and 23.8 million basic and diluted weighted average shares outstanding, respectively), which compares to net income of $96,762, or $0.01 per basic and diluted share (based on 21.0 million basic and diluted weighted average shares outstanding, respectively), for the same period of 2009. First quarter 2009 net income included non-cash expenses of $467,391 related to the payoff of debt balances with two senior lenders and related parties.

Mr. McQuain continued, "While we continue to invest in our emerging DVD business, we remain excited about the potential of our core ATM business. Our ATM sales pipeline remains robust and we expect to continue to close business throughout the remainder of the year. On the DVD side, as more consumers embrace the convenience of the self-service model, we believe additional opportunities will present themselves to grow this aspect of our business. Additionally, existing ATM customers and potential customers are reevaluating their DVD kiosk business as their initial programs are coming up for renewal, and we expect to actively participate in the competitive bidding process. In summary, we are optimistic about our ability to grow both sides of our business organically."

Balance Sheet and Cash Flows

Net cash provided by continuing operating activities during the three-month period ended March 31, 2010 was $919,176 compared to net cash provided by continuing operating activities of $1.1 million in the same period of 2009. Stockholders' equity increased 2.2% to $16.9 million from $16.6 million at December 31, 2009.

Michael J. Loiacono, Chief Financial Officer of the Company, stated, "We continue to see the positive results of eliminating and refinancing our debt during 2009, and our stronger balance sheet and consistent free cash flow enabled us to accelerate our growth by aggressively investing in our DVD kiosk initiative."

Conference Call Information

Anyone interested in participating should call 888-715-1402 and enter pass code 8472981 if calling within the United States, or 913-312-1513 and pass code 8472981 if calling internationally, approximately 5 to 10 minutes prior to 10 a.m. There will be a playback available until May 13, 2010. To listen to the playback, please call 888-203-1112 if calling within the United States or 719-457-0820 if calling internationally. Please use pass code 8472981 for the replay. A transcript of the conference call will be available on the Company's website on May 10, 2010 or by calling Brett Maas of Hayden IR at 646-536-7331.

About Global Axcess Corp

Headquartered in Jacksonville, Florida, Global Axcess Corp was founded in 2001 with a mission to emerge as the leading independent provider of self-service kiosk services in the United States. The Company provides turnkey ATM and other self-service kiosk management solutions that include cash and inventory management, project and account management services. Global Axcess Corp currently owns, manages or operates more than 4,500 ATMs and other self-service kiosks in its national network spanning 43 states. For more information on the Company, please visit http://www.globalaxcess.biz. For more information on Nationwide Money Services, please visit http://www.nationwidemoney.com.

Investor Relations Contacts:

 Sharon Jackson: 904-395-1149

 IR@GAXC.biz


 Hayden IR:

 Brett Maas or Jeff Stanlis: (646) 536-7331

 Brett@haydenir.com / Jeff@haydenir.com



This press release may contain forward-looking statements. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as: "believes," "expects," "may," "will," "should," or "anticipates," or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Various important risks and uncertainties may cause the Company's actual results to differ materially from the results indicated by these forward-looking statements. For a list and description of the risks and uncertainties the Company faces, please refer to Part I, Item 1 of the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 3, 2010, and other filings that have been filed with the Securities and Exchange Commission. The Company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, and such statements are current only as of the date they are made.

- tables follow -

GLOBAL AXCESS CORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS





(Unaudited)


(Audited)






March 31, 2010


December 31, 2009


ASSETS







Current assets







Cash and cash equivalents


$               2,073,838


$                  2,007,860



Automated teller machine vault cash


250,000


250,000



Accounts receivable, net of allowance of $16,579 in
 2010 and $12,616 in 2009

898,672


845,000



Inventory, net of allowance for obsolescence of
 $94,572 in 2010 and $94,572 in 2009

364,667


308,031



Deferred tax asset - current


868,848


868,848



Prepaid expenses and other current assets


328,821


132,100




Total current assets


4,784,846


4,411,839










Fixed assets, net


5,399,358


5,299,661










Other assets







Merchant contracts, net


10,466,556


10,665,613



Intangible assets, net


4,093,319


4,095,911



Deferred tax asset - non-current


813,618


813,618



Restricted cash


800,000


800,000



Other assets


35,807


30,307










Total assets



$             26,393,504


$                26,116,949


















LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities







Accounts payable and accrued liabilities


$               3,337,746


$                  2,983,583



Automated teller machine vault cash payable

250,000


250,000



Notes payable - related parties  - current portion, net

27,447


26,722



Notes payable - current portion


70,678


19,803



Senior lenders' notes payable - current portion, net

1,828,572


1,828,572



Capital lease obligations - current portion


552,706


667,233




Total current liabilities


6,067,149


5,775,913










Long-term liabilities







Notes payable - related parties - long-term portion, net

65,745


72,690



Notes payable - long-term portion


230,198


73,120



Senior lenders' notes payable - long-term portion, net

2,850,840


3,300,000



Capital lease obligations - long-term portion

247,937


329,314



Deferred tax liability- long-term portion


-


-


Total liabilities


9,461,869


9,551,037


















Stockholders' equity







Preferred stock; $0.001 par value; 5,000,000
  shares authorized, no shares issued and
  outstanding

-


-



Common stock; $0.001 par value; 45,000,000 shares
  authorized, 22,025,536  and 21,931,786 shares
  issued and 21,943,940 and 21,883,924 shares
  outstanding at 03/31/10 and 12/31/09, respectively

21,992


21,932









Additional paid-in capital


22,977,975


22,900,880



Accumulated deficit


(6,026,366)


(6,344,934)



Treasury stock; 81,596 and 47,862 shares of
  common stock at cost at 03/31/10 and 12/31/09,
  respectively

(41,966)


(11,966)




Total stockholders' equity


16,931,635


16,565,912


Total liabilities and stockholders' equity


$             26,393,504


$                26,116,949












GLOBAL AXCESS CORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)





For the Three Months Ended




March 31, 2010


March 31, 2009







Revenues

$               5,380,078


$               5,414,434







Cost of revenues

2,857,934


2,855,879


Gross profit

2,522,144


2,558,555







Operating expenses





Depreciation expense

309,895


269,494


Amortization of intangible merchant contracts

199,332


193,617


Selling, general and administrative

1,525,863


1,292,963


Stock compensation expense

47,155


25,711



Total operating expenses

2,082,245


1,781,785


Operating income from continuing operations





  before items shown below

439,899


776,770







Interest expense, net

(121,331)


(212,617)

Loss on early extinguishment of debt

-


(467,391)

Net Income

$                  318,568


$                    96,762







Income per common share - basic:




Net Income per common share

$                        0.02


$                        0.01







Income per common share - diluted:




Net Income per common share

$                        0.01


$                        0.01







Weighted average common shares outstanding:




Basic


21,892,152


20,973,924

Diluted

23,758,755


20,973,924









GLOBAL AXCESS CORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)





For the Three Months Ended





March 31, 2010


March 31, 2009








Cash flows from operating activities:





Income from continuing operations

$                    318,568


$                      96,762


Adjustments to reconcile net income from continuing operations
 to net cash provided by continuing operating activities:










Stock based compensation

47,155


25,711



Loss on early extinguishment of debt

-


467,391



Depreciation expense

309,895


269,494



Amortization of intangible merchant contracts

199,332


193,617



Amortization of capitalized loan fees

6,470


11,607



Allowance for doubtful accounts

3,963


410



Allowance for inventory obsolescence

-


29,718



Non-cash interest income on swap agreement with senior lender

-


(7,921)



Accretion of discount on notes payable

-


41,498


Changes in operating assets and liabilities:






Change in accounts receivable

(57,635)


(99,382)



Change in inventory

(56,636)


33,012



Change in prepaid expenses and other current assets

(196,721)


21,387



Change in other assets

(5,500)


(16,975)



Change in intangible assets, net

(3,878)


(70,696)



Change in accounts payable and accrued liabilities

354,163


147,765




Net cash provided by continuing operating activities

919,176


1,143,398








Cash flows from investing activities:





Costs of acquiring merchant contracts

(275)


(976)


Purchase of property and equipment

(409,592)


(127,453)




Net cash used in investing activities

(409,867)


(128,429)








Cash flows from financing activities:





Proceeds from senior lenders'  notes payable

-


5,000,000


Proceeds from notes payable

225,282


-


Change in restricted cash

-


(800,000)


Principal payments on senior lenders'  notes payable

(449,160)


(5,101,577)


Principal payments on notes payable

(17,329)


-


Principal payments on notes payable - related parties

(6,220)


(5,552)


Principal payments on capital lease obligations

(195,904)


(211,027)




Net cash used in financing activities

(443,331)


(1,118,156)

Increase (decrease) in cash

65,978


(103,187)

Cash, beginning of period

2,007,860


1,560,910

Cash, end of the period

$                 2,073,838


$                 1,457,723








Cash paid for interest

$                    115,032


$                    166,164

















The following table sets forth a reconciliation of net income from continuing operations to EBITDA from continuing operations for the three months ended March 31, 2010 and 2009:



For the Three Months Ended


March 31, 2010


March 31, 2009





Net income from continuing operations

$                    318,568


$                      96,762

Interest expense, net

121,331


212,617

Depreciation expense

309,895


269,494

Amortization of intangible merchant contracts

199,332


193,617

EBITDA from continuing operations

$                    949,126


$                    772,490







The following table sets forth a reconciliation of net income from continuing operations to EBITDA from continuing operations before stock compensation expense and loss on early extinguishment of debt ("Adjusted EBITDA") for the three months ended March 31, 2010 and 2009:



For the Three Months Ended


March 31, 2010


March 31, 2009





Net income from continuing operations

$                    318,568


$                      96,762

Interest expense, net

121,331


212,617

Depreciation expense

309,895


269,494

Amortization of intangible merchant contracts

199,332


193,617

Stock compensation expense

47,155


25,711

Loss on early extinguishment of debt

-


467,391

Adjusted EBITDA

$                    996,281


$                 1,265,592







SOURCE Global Axcess Corp