VersaPay Corporation
TSX VENTURE : VPY

VersaPay Corporation

December 12, 2013 11:45 ET

VersaPay Announces 2013 Third Quarter and Year Results

TORONTO, ONTARIO--(Marketwired - Dec. 12, 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 and nine months ended September 30, 2013. All amounts are in Canadian dollars unless otherwise noted.

Q3 2013 Highlights
  • Grew year over year revenues by 4%
  • Grew year over year Electronic Money Transfer ("EMT") per-transaction revenues by 159%
  • Continued increase in year over year credit card processing volumes by 4%
  • Entered into a reseller agreement with Heartland Payment Systems
Q3 2013 Financial Summary1
Three months ended, Sept 30 Nine months ended, Sept 30
2013 2012 2013 2012
Total Revenue $4.8M $4.6M $13.3M $12.7M
Cash Operating Expenses 2 $1.0M $1.0M $3.1M $3.2M
Adjusted EBITDA 3 $(0.1)M $(0.09)M $(0.5)M $(0.6)M
Net Loss $(0.2)M $(0.2)M $(0.8)M $(1.0)M
Sept 30, 2013
Cash $1.0 M

"Overall, we are pleased with the results for the third quarter," said Craig O'Neill, CEO of VersaPay. Mr. O'Neill continued, "While our financial results continue to be driven by our POS business, we are continue to be encouraged by the progress made in our VersaPay Solutions business. In addition to another quarter of strong growth in EMT transaction revenues, we signed an important agreement with Heartland Payment Systems in the United States. This five year agreement allows Heartland to market VersaPay's eInvoice solution to its extensive customer base across the United States through its world class and industry- recognized sales distribution network."

Q3 and Year to Date 2013 Financial Review

Total revenues for Q3 2013 increased 4% to $4.8 million from $4.6 million in Q3 2012. Total revenue for the nine months ended September 30, 2013 increased 5% to $13.3 million from $12.7 million for the same period in 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 2% to $1.0 million from $1.0 million in Q3 2013 from the same period in 2012. Cash operating expense for the nine months ended September 30, 2013 decreased 4% to $3.1 million from $3.2 million in 2012.

Adjusted EBITDA for Q3 2013 was $(0.1) million, compared to $(0.09) million in Q3 2012. For the nine months ended September 30, 2013, Adjusted EBITDA was $(0.5) million, compared to $(0.6) million in 2012.

Loss from continuing operations for Q3 2013 was $(0.2) million. This compares to a loss from continuing operations of $(0.2) million for Q3 2012. For the nine months ended September 30, 2013, loss from continuing operations was $(0.8) million, compared to $(1.0) million in 2012.

  1. Condensed interim financial statements and MD&A for the three and nine months ended September 30, 2013 will be available on the Company's website at www.versapay.com and on SEDAR.
  2. Defined as operating expense excluding depreciation, amortization and share-based payments.
  3. Adjusted EBITDA is defined as Earnings Before Interest, Taxes, Depreciation, Amortization, Share-Based Payments and Other Income. See table A.
Table A
Three months ended,
Sept 30
Nine months ended,
Sept 30
2013 2012 2013 2012
Adjusted EBITDA 1 ($126,608 ) ($85,720 ) ($510,683 ) ($599,563 )
Share based payments (57,018 ) (76,581 ) (182,740 ) (133,669 )
Interest expense (45,021 ) (39,229 ) (135,286 ) (117,992 )
Amortization (19,357 ) (42,177 ) (90,948 ) (129,991 )
Other income - - 85,774 -
Net Loss ($248,004 ) (243,707 ) ($833,883 ) ($981,215 )

Appointment of Craig O'Neill to the Board

The Company is also pleased to announce that Craig O'Neill has been appointed to its board of directors. Mr. O'Neill took over as the Company's Chief Executive Officer on September 1, 2013.

About VersaPay

VersaPay is a financial technology company that delivers payment solutions for businesses. Serving more than 25,000 customers, VersaPay, together with its partners, provides the hardware, technology, infrastructure and support services to enable businesses of all types to accept and process electronic payments. In addition, the Company's cloud-based invoice presentment and payment platform facilitates the efficient exchange of documents and payments between suppliers and customers.

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.

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.

September 30, 2013 December 31, 2012
$ $
ASSETS
Current
Cash and cash equivalents 1,006,608 1,461,388
Funds held for merchants 4,067,187 1,726,284
Receivables 410,661 410,480
Prepaid expenses 50,411 27,973
5,534,867 3,626,125
Non-current
Equipment 208,022 290,449
Intangible assets 7,893 39,011
Total Assets 5,750,782 3,955,585
LIABILITIES
Current
Accounts payable and accrued liabilities 382,182 459,621
Funds due to merchants 4,067,187 1,726,284
Current portion of obligations under finance lease 26,182 37,492
4,475,551 2,223,397
Non-current
Obligations under finance lease, net of current portion 8,443 29,361
Promissory note 680,111 630,190
Total Liabilities 5,164,105 2,882,948
EQUITY
Share capital 10,295,887 9,981,720
Reserve 1,548,410 1,497,517
Warrants 355,123 372,260
Deficit (11,612,743 ) (10,778,860 )
Total Equity 586,677 1,072,637
Total Liabilities and Equity 5,750,782 3,955,585
Three months ended, Sept 30 Nine months ended, Sept 30
2013 2012 2013 2012
$ $ $ $
Revenue
POS Merchant Services 4,701,409 4,533,759 13,059,478 12,547,152
VersaPay Solutions 94,535 69,214 258,149 182,373
4,795,944 4,602,973 13,317,627 12,729,525
Cost of Sales
POS Merchant Services 3,885,612 3,700,812 10,682,276 10,120,119
VersaPay Solutions 72,467 41,728 192,277 117,909
3,958,079 3,742,540 10,874,553 10,238,028
Gross Profit 837,865 860,433 2,443,074 2,491,497
Expenses
Bank charges and interest 45,021 39,229 135,286 117,992
Consulting fees 57,108 58,660 186,872 224,229
Depreciation and amortization 19,357 42,177 90,948 129,991
General and administrative 76,350 94,086 260,362 335,360
Marketing and promotion 21,863 10,182 102,285 44,515
Professional fees 122,286 96,681 354,213 300,853
Rent and occupancy 59,601 73,228 186,962 241,743
Research and development 86,553 91,069 285,670 274,174
Salaries and benefits 455,396 453,430 1,349,494 1,435,524
Share based payments 57,018 76,581 182,740 133,669
Technology and infrastructure 57,475 61,019 155,962 182,895
Travel 27,841 7,798 71,937 51,767
Total Expenses 1,085,869 1,104,140 3,362,731 3,472,712
Other Income - - 85,774 -
Net Loss and Comprehensive Loss for the Period (248,004 ) (243,707) (833,883 ) (981,215)
Loss per share
Basic and diluted $ (0.02 ) $ (0.02) $ (0.05 ) $ (0.07)
Diluted $ (0.02 ) $ (0.02) $ (0.05 ) $ (0.07)
Weighted average number of common shares outstanding, basic and diluted 15,578,677 15,337,498 15,477,876 14,587,852
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 - - - (981,215 ) (981,215 )
Shares Issued 1,780,202 - 54,270 - 1,834,472
Exercise of options 310,456 (67,456 ) - - 243,000
Share based payments - 133,668 - - 133,668
Warrants expired - 372,300 (372,300 ) - -
At September 30, 2012 $ 9,981,720 $ 1,449,037 $ 372,261 $ (10,290,871 ) $ 1,512,147
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 - - - (833,883 ) (833,883 )
Shares Issued - - - - -
Exercise of options 284,917 (148,984 ) - - 135,933
Exercise of warrants 29,250 17,137 (17,137 ) 29,250
Share based payments - 182,740 - - 182,740
Warrants expired - - - - -
At September 30, 2013 $ 10,295,887 $ 1,548,410 $ 355,123 $ (11,612,743 ) $ 586,677
Nine months ended,
September 30
2013 2012
$ $
Cash Provided By (Used In) Operating Activities
Net loss for the period (833,883 ) (981,215 )
Items not affecting cash:
Depreciation of equipment 59,830 86,076
Amortization of intangible assets 31,118 43,915
Interest accreted on promissory note 49,921 38,942
Loss on disposal of equipment 15,795 -
Share based payments 182,740 133,669
Change in non-cash working capital items
Receivables (181 ) (26,429 )
Prepaid expenses (22,438 ) 6,260
Accounts payable and accrued liabilities (77,439 ) (200,149 )
(594,537 ) (898,931 )
Cash Provided By (Used in) in Investing Activities
Acquisition of equipment (5,098 ) (25,424 )
Proceeds on disposal of equipment 11,900 -
6,802 (25,424 )
Cash Provided by (Used In) Financing Activities
Issuance of common shares, net of issuance costs 165,183 2,077,472
Finance lease payments (32,228 ) (46,356 )
132,955 2,031,116
Increase (decrease) in cash and cash equivalents (454,780 ) 1,106,761
Cash and cash equivalents, beginning of period 1,461,388 559,497
Cash and cash equivalents, end of period 1,006,608 1,666,258

Contact Information