VersaPay Corporation
TSX VENTURE : VPY

VersaPay Corporation

April 26, 2013 09:00 ET

VersaPay Announces 2012 Year End Results

TORONTO, ONTARIO--(Marketwired - April 25, 2013) - VersaPay Corporation (TSX VENTURE:VPY) ("VersaPay" or the "Company"), a provider of merchant credit and debit card payment processing services ("POS Merchant Services") and proprietary, cloud-based financial technology Solutions ("VersaPay Solutions"), today announced its financial and operational results for the year ended December 31, 2012. All amounts are in Canadian dollars unless otherwise noted.

Fiscal 2012 Highlights

  • Grew year over year revenues by 11% and grew recurring revenues by 13%
  • Adjusted EBITDA(1)was $(0.9) million, as the Company continued investing in its VersaPay Solutions financial technology business
  • Total processing volumes exceeded $1 billion
  • Launched the electronic invoicing feature on its proprietary platform, creating a cloud-based electronic invoice presentment and payment solution for businesses
  • Announced strategic marketing partnership with MasterCard International Incorporated to increase MasterCard volumes in the B2B market.

Q4 and Fiscal 2012 Financial Summary(2)

Three months ended, December 31 Year ended, December 31
2012 2011 2012 2011
Recurring Revenues (3) $4.1M $3.7M $16.8M $14.9M
Non-recurring revenue (4) $0.02M $0.02M $0.07M $0.2M
Total Revenue $4.1M $3.7M $16.9M $15.1M
Cash Operating Expenses (5) $1.2M $1.0M $4.4M $3.6M
Adjusted EBITDA (1) $(0.3)M $(0.2)M $(0.9)M $(0.4)M
Net Loss $(0.5)M $(0.4)M $(1.5)M $(0.9)M
December 31, 2012
Cash $1.5 M

"We achieved a number of important milestones in 2012," said Bill McGill, CEO of VersaPay. "Among other accomplishments, we renewed our processing agreement with Chase Paymentech, entered into a strategic marketing relationship with MasterCard International Incorporated and released critical features on our proprietary platform." Mr. McGill continued, "Our near term objectives include entering into additional partnerships and end customer relationships that will further underscore the volume of our proprietary platform."

Q4 2012 and Annual 2012 Financial Review

Total revenues for Q4 2012 increased 11% to $4.1 million from $3.7 million in Q4 2011. Of this amount, recurring revenues for Q4 2012 increased 11% to $4.1 million from $3.7 million in Q4 2011. Total revenue for the year ended, December 31, 2012 increased 11% to $16.9 million from $15.1 million for the year ended December 31, 2011. Of this amount, recurring revenues for the year ended December 31, 2012 increased 13% to $16.8 million from $14.9 million in 2011. The year-over-year improvement was driven primarily by growth in the Company's POS transaction processing fees.

Cash operating expense (excluding depreciation and amortization, share based payments and impairment loss) increased to $1.2 million from $1.0 million in Q4 2012 from the same period in 2011. Cash operating expense for the year ended December 31, 2012 increased 21% to $4.4 million from $3.6 million in 2011.

Adjusted EBITDA for Q4 2012 was $(0.3) million, compared to $(0.2) million in Q4 2011. For the year ended December 31, 2012, Adjusted EBITDA was $(0.9) million, compared to $(0.4) million in 2011.

Net loss for Q4 2012 was $(0.5) million. This compares to a net loss of $(0.4) million for Q4 2011. For the year ended December 31, 2012, net loss was $(1.5) million, compared to $(0.9) million in 2011.

(1) Adjusted EBITDA is defined as Earnings Before Interest, Taxes, Depreciation, Amortization, Share based payments and Impairment loss. See table A.

(2) Audited consolidated financial statements and MD&A for the year ended December 31, 2012 will be available on the Company's website at www.versapay.com and on SEDAR.

(3) Defined as POS transaction processing fees and VersaPay Solutions fees.

(4) Defined as POS product sales (point-of-sale devices) and other.

(5) Defined as operating expenses excluding depreciation and amortization, share based payments and impairment loss.

Table A

Three months ended, December 31 Year ended, December 31
2012 2011 2012 2011
Adjusted EBITDA 1 (338,609 ) (237,779 ) (938,173 ) (406,825 )
Share based payments (48,479 ) (42,193 ) (182,148 ) (193,612 )
Interest expense (30,040 ) (38,366 ) (148,031 ) (150,385 )
Amortization (39,098 ) (44,672 ) (169,089 ) (172,601 )
Impairment loss (31,763 ) - (31,763 ) -
Net Loss (487,989 ) (363,010 ) (1,469,204 ) (923,423 )

About VersaPay

VersaPay's financial technology enables businesses and consumers across Canada to accept and process credit, debit and gift card transactions. As a payment services and financial technology company serving more than 2,500 Canadian businesses, VersaPay, in conjunction with its partners, provides the hardware, technology, infrastructure and support services that businesses of all types require to accept and process electronic payments from their consumers and clients.

While its core business is payment processing services, VersaPay also provides enhanced financial technology solutions such as VersaPay EMT, the Company's electronic payments gateway, and VersaPay EIPP, the Company's proprietary Electronic Bill Presentment and Payment solution that enables merchants and consumers to easily transact with one another. VersaPay is headquartered in Toronto, Canada and has operations in Montreal and New York. To learn more about VersaPay, visit http://www.versapay.com.

Forward Looking and Other Cautionary Statements

This news release contains forward-looking statements and information that are based on the beliefs of management and reflect the Company's current expectations. When used in this news release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology, are intended to identify forward-looking statements and information. Such statements and information reflect the current view of the Company with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, risks relating to the speculative nature of the Company's business, the Company's formative stage of development and the Company's financial position. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and the Company undertakes no obligation to update forward looking statements if these beliefs, estimates and opinions or other circumstances should change.

Investors are cautioned against attributing undue certainty to forward-looking statements. There are a number of important factors that could cause the Company's actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others, risks related to following: the Company's financial position and the potential need for future financings, the ability of the Company to maintain its relationship with its strategic partner for payment processing, the efforts and abilities of the senior management team, the ability of the Company to attract and retain skilled management, competition in the payment processing industry, and the Company's ability to respond to technological change and protect its intellectual property rights.

The Company cautions that the foregoing list of material factors is not exhaustive. When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. There can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS THE EXPECTATIONS OF THE COMPANY AS OF THE DATE OF THIS NEWS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE THE COMPANY MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE SECURITIES LEGISLATION.

December 31, 2012 December 31, 2011
$ $
ASSETS
Current
Cash and cash equivalents 1,461,388 559,497
Funds held for merchants 1,726,284 443,005
Receivables 410,480 417,154
Prepaid expenses 27,973 28,685
3,626,125 1,448,341
Non-current
Equipment 290,449 397,530
Intangible assets 39,011 97,564
Total Assets 3,955,585 1,943,435
LIABILITIES
Current
Accounts payable and accrued liabilities 459,621 535,741
Funds due to merchants 1,726,284 443,005
Current portion of obligations under finance lease 37,492 53,026
2,223,397 1,031,772
Non-current
Obligations under finance lease, net of current portion 29,361 52,872
Promissory note 630,190 576,569
Total Liabilities 2,882,948 1,661,213
EQUITY
Share capital 9,981,720 7,891,062
Reserve 1,497,517 1,010,525
Warrants 372,260 690,291
Deficit (10,778,860 ) (9,309,656 )
Total Equity 1,072,637 282,222
Total Liabilities and Equity 3,955,585 1,943,435
Year ended December 31
2012 2011
$ $
Revenue
POS transaction processing fees 16,546,053 14,667,516
POS product sales and other 74,779 233,040
VersaPay Solutions fees 251,210 234,582
16,872,042 15,135,138
Cost of Sales
POS cost of services 13,321,628 11,712,649
POS cost of products sold and other 63,421 150,693
VersaPay Solutions cost of services 223,257 207,364
13,608,306 12,070,706
Gross Profit 3,263,736 3,064,432
Expenses
Bank charges and interest 148,031 150,385
Consulting fees 312,272 200,013
Depreciation and amortization 169,089 172,601
General and administrative 438,431 378,094
Marketing and promotion 66,103 151,505
Professional fees 347,261 260,470
Rent and occupancy 320,248 290,897
Research and development 388,174 71,277
Salaries and benefits 2,031,143 1,709,970
Share based payments 182,148 193,612
Technology and infrastructure 234,637 288,788
Travel 63,640 120,243
4,701,177 3,987,855
Other Expenses
Impairment loss 31,763 -
Total Expenses 4,732,940 3,987,855
Net Loss and Comprehensive Loss for the Period (1,469,204 ) (923,423 )
Loss per share
Basic and diluted $ (0.10 ) $ (0.07 )
Weighted average number of common shares
outstanding, basic and diluted 14,787,415 12,994,430
Issued Capital Reserve Warrants Deficit Total Equity
As at December 31, 2010 $ 7,819,002 $ 865,645 $ 696,619 $ (8,386,233 ) $ 995,033
Net loss for the period - - - (923,423 ) (923,423 )
Exercise of options 72,060 (55,060 ) - - 17,000
Share based payments - 193,612 - - 193,612
Warrants expired - 6,328 (6,328 ) - -
At December 31, 2011 $ 7,891,062 $ 1,010,525 $ 690,291 $ (9,309,656 ) $ 282,222
Issued Capital Reserve Warrants Deficit Total Equity
As at December 31, 2011 $ 7,891,062 $ 1,010,525 $ 690,291 $ (9,309,656 ) $ 282,222
Net loss for the period - - - (1,469,204 ) (1,469,204 )
Shares Issued 1,780,202 - 54,269 - 1,834,471
Exercise of options 310,456 (67,456 ) - - 243,000
Share based payments - 182,148 - - 182,148
Warrants expired - 372,300 (372,300 ) - -
At December 31, 2012 $ 9,981,720 $ 1,497,517 $ 372,260 $ (10,778,860 ) $ 1,072,637
Year ended December 31,
2012 2011
$ $
Cash Provided By (Used In) Operating Activities
Net loss for the period (1,469,204 ) (923,423 )
Items not affecting cash:
Depreciation of equipment 110,536 115,833
Amortization of intangible assets 58,553 56,768
Impairment loss 31,763 -
Interest accreted on promissory note 53,621 41,828
Loss on disposal of equipment 1,328 -
Share based payments 182,148 193,612
Change in non-cash working capital items
Receivables 6,674 48,187
Prepaid expenses 712 (9,999 )
Accounts payable and accrued liabilities (76,120 ) 94,957
(1,099,989 ) (382,237 )
Cash Provided By (Used in) in Investing Activities
Acquisition of equipment (25,425 ) (124,704 )
Proceeds on disposal of equipment 7,753 -
Acquisition of intangible assets - (13,569 )
(17,672 ) (138,273 )
Cash Provided by (Used In) Financing Activities
Issuance of common shares, net of issuance costs 2,077,471 17,000
Finance lease payments (57,919 ) (58,809 )
2,019,552 (41,809 )
Increase (decrease) in cash and cash equivalents 901,891 (562,319 )
Cash and cash equivalents, beginning of period 559,497 1,121,816
Cash and cash equivalents, end of period 1,461,388 559,497

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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