VersaPay Corporation
TSX VENTURE : VPY

VersaPay Corporation

May 30, 2013 15:07 ET

VersaPay Announces 2013 First Quarter Results

TORONTO, ONTARIO--(Marketwired - May 30, 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 three months ended March 31, 2013. All amounts are in Canadian dollars unless otherwise noted.

Q1 2013 Highlights

  • Grew year over year revenues by 6%
  • Grew year over year EMT per-transaction revenues by 344%
  • Adjusted EBITDA1 was $(0.2) million, as the Company continued investing in its VersaPay Solutions financial technology business

Q1 2013 Financial Summary2

Three months ended, March 31
2013 2012
Total Revenue $4.1M $3.9M
Cash Operating Expenses3 $1.1M $1.0M
Adjusted EBITDA1 $(0.2)M $(0.2)M
Net Loss $(0.3)M $(0.3)M
March 31, 2013
Cash $1.2 M

"Overall, we are pleased with the results of the first quarter," said Bill McGill, CEO of VersaPay. Mr. McGill continued, "While our financial results continue to be driven by our POS business, we are also encouraged by the progress made in our VersaPay Solutions business. In addition to strong growth in EMT transaction revenues, our pipeline of key partner and end customer relationships is expected to provide a foundation for future growth."

Q1 2013 Financial Review

Total revenues for Q1 2013 increased 6% to $4.1 million from $3.8 million in Q1 2012. The year-over-year improvement was driven primarily by growth in the Company's transaction processing fees.

Cash operating expense (excluding amortization and share-based payments) increased to $1.1 million from $1.0 million in Q1 2013 from the same period 2012.

Adjusted EBITDA for Q1 2013 was $(0.2) million, and is consistent with Q1 2012 of $(0.2) million.

Loss from continuing operations for Q1 2013 was $(0.3) million. This compares to a loss from continuing operations of $(0.3) million for Q1 2012.

1 Adjusted EBITDA is defined as Earnings Before Interest, Taxes, Depreciation, Amortization, Share-based payments and Other income. See table A.

2 Condensed interim financial statements and MD&A for the three months ended March 31, 2013 will be available on the Company's website at www.versapay.com and on SEDAR.

3 Defined as operating expense excluding amortization and share-based payments.

Table A

Three months ended, March 31
2013 2012
Adjusted EBITDA1 ($247,734) ($215,451)
Share based payments (61,172) (25,154)
Interest expense (43,698) (39,149)
Amortization (36,615) (43,815)
Other income 62,746 -
Net Loss ($326,473) ($323,569)

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 and VersaPay EIPP - the Company's proprietary Electronic Bill Presentment and Payment solution - which enables merchants and consumers to easily transact with one another.

VersaPay is headquartered in Toronto, Canada and has operations in Montreal, Vancouver 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.

March 31, 2013 December 31, 2012
$ $
ASSETS
Current
Cash and cash equivalents 1,214,865 1,461,388
Funds held for merchants 2,611,029 1,726,284
Receivables 461,071 410,480
Prepaid expenses 38,404 27,973
4,325,369 3,626,125
Non-current
Equipment 269,132 290,449
Intangible assets 24,373 39,011
Total Assets 4,618,874 3,955,585
LIABILITIES
Current
Accounts payable and accrued liabilities 488,633 459,621
Funds due to merchants 2,611,029 1,726,284
Current portion of obligations under finance lease 35,930 37,492
3,135,592 2,223,397
Non-current
Obligations under finance lease, net of current portion 19,205 29,361
Promissory note 645,808 630,190
Total Liabilities 3,800,605 2,882,948
EQUITY
Share capital 9,996,783 9,981,720
Reserve 1,554,559 1,497,517
Warrants 372,260 372,260
Deficit (11,105,333) (10,778,860)
Total Equity 818,269 1,072,637
Total Liabilities and Equity 4,618,874 3,955,585
Three months ended, March 31
2013 2012
$ $
Revenue
POS Merchant Services 4,066,924 3,848,242
VersaPay Solutions 71,049 56,665
4,137,973 3,904,907
Cost of Sales
POS Merchant Services 3,292,057 3,073,945
VersaPay Solutions 57,359 48,399
3,349,416 3,122,344
Gross Profit 788,557 782,563
Expenses
Bank charges and interest 43,698 39,149
Consulting fees 61,412 93,653
Depreciation and amortization 36,615 43,815
General and administrative 91,118 126,651
Marketing and promotion 28,459 22,599
Professional fees 150,060 88,540
Rent and occupancy 75,112 88,374
Research and development 103,257 74,971
Salaries and benefits 459,944 421,846
Share based payments 61,172 25,154
Technology and infrastructure 50,251 62,419
Travel 16,678 18,961
Total Expenses 1,177,776 1,106,132
Other Income 62,746 -
Net Loss and Comprehensive Loss for the Period (326,473) (323,569)
Loss per share
Basic and diluted $(0.02) $(0.02)
Diluted $(0.02) $(0.02)
Weighted average number of common shares outstanding, basic and diluted 15,367,770 13,130,381
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 - - - (323,569) (323,569)
Shares Issued 1,780,202 54,269 - 1,834,471
Exercise of options 237,728 (48,228) - - 189,500
Share based payments - 25,154 - - 25,154
Warrants expired 372,300 (372,300) -
At March 31, 2012 $9,908,992 $1,359,751 $372,260 $(9,633,225) $2,007,778
Issued Capital Reserve Warrants Deficit Total Equity
As at December 31, 2012 $9,981,720 $1,497,517 $372,260 $(10,778,860) $1,072,637
Net loss for the period - - - (326,473) (326,473)
Shares Issued - - - - -
Exercise of options 15,063 (4,130) - - 10,933
Share based payments - 61,172 - - 61,172
Warrants expired - - - - -
At March 31, 2013 $9,996,783 $1,554,559 $372,260 $(11,105,333) $818,269
Three months ended, March 31
2013 2012
$ $
Cash Provided By (Used In) Operating Activities
Net loss for the period (326,473) (323,569)
Items not affecting cash:
Depreciation of equipment 21,977 29,177
Amortization of intangible assets 14,638 14,638
Interest accreted on promissory note 15,618 12,184
Share based payments 61,172 25,154
Change in non-cash working capital items
Receivables (50,591) (33,475)
Prepaid expenses (10,431) 8,397
Accounts payable and accrued liabilities 29,012 (163,866)
(245,078) (431,360)
Cash Provided By (Used in) in Investing Activities
Acquisition of equipment (660) (14,632)
(660) (14,632)
Cash Provided by (Used In) Financing Activities
Issuance of common shares, net of issuance costs 10,933 2,023,972
Finance lease payments (11,718) (16,606)
(785) 2,007,366
Increase (decrease) in cash and cash equivalents (246,523) 1,561,374
Cash and cash equivalents, beginning of period 1,461,388 559,497
Cash and cash equivalents, end of period 1,214,865 2,120,871

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