VersaPay Corporation

TSX VENTURE : VPY


VersaPay Corporation

April 24, 2014 09:00 ET

VersaPay Reports Fiscal 2013 Results

TORONTO, ONTARIO--(Marketwired - April 24, 2014) - VersaPay Corporation (TSX VENTURE:VPY) ("VersaPay" or the "Company"), a leading provider of cloud-based payment solutions, is pleased to report financial results for fiscal 2013. Top-line revenue for fiscal 2013 was $17.5 million compared to $16.9 million the previous fiscal year. Revenue growth occurred across both of the company's operating units, the POS Merchant Services business and the emerging cloud-based VersaPay Solutions business.

Fiscal 2013 Highlights:

  • Grew total processing volume to $1.1 billion for fiscal 2013 versus $1 billion in fiscal 2013
  • Entered into a payment processing and referral agreement with TD Merchant Services, an operating division of The Toronto Dominion Bank
  • Hired a successful cloud-based software entrepreneur, Craig O'Neill, as CEO
  • Entered into a U.S. reseller agreement with Heartland Payment Systems
  • Loss per share declined to $0.07 per share compared to $0.10 per share in fiscal 2012

Subsequent to Fiscal 2013 Highlights:

  • Winpak Ltd.'s Winnipeg manufacturing division became a VersaPay Solutions customer, selecting VersaPay's cloud-based eInvoicing solution to automate its accounts receivable processes
  • Completed a $5 million bought-deal financing

Q4 and Fiscal 2013 Financial Summary(1)

Three months ended,
Dec 31
Year ended,
Dec 31
2013 2012 2013 2012
Total Revenue $ 4.2M $ 4.1M $ 17.5M $ 16.9M
Cash Operating Expenses(2) $ 1.0M $ 1.2M $ 4.0M $ 4.3M
Adjusted EBITDA(3) $ (0.1)M $ (0.3)M $ (0.7)M $ (1.0)M
Net Loss $ (0.3)M $ (0.5)M $ (1.1)M $ (1.5)M
Dec 31, 2013
Cash $ 1.3 M
Notes:
(1) The audited consolidated financial statements for the year ended December 31, 2013 and the related Management's Discussion and Analysis for the period will be available on the Company's website at www.versapay.com and on SEDAR at www.sedar.com.
(2) Cash operating expense is 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, other income and impairment loss. See table A below.

"I am very pleased to report another year of revenue growth for VersaPay," commented Craig O'Neill, VersaPay's CEO. "Although the lion's share of revenue continues to derive from our POS business, we see momentum building with VersaPay Solutions. Our pipeline is building nicely, and will only increase as our partners, Heartland Payment Systems in the U.S. and TD Merchant Services in Canada, come on-line. We are very encouraged with the trajectory of the Solutions business."

Q4 and Fiscal 2013 Financial Review

Total revenues for Q4 2013 increased 2% to $4.2 million from $4.1 million in Q4 2012. Total revenue for the year ended December 31, 2013 increased 4% to $17.5 million from $16.9 million for the year ended December 31, 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) decreased 19% to $1.0 million from $1.2 million in Q4 2013 from the same period in 2012. Cash operating expense for the year ended December 31, 2013 decreased 7% to $4.0 million from $4.3 million in 2012.

Adjusted EBITDA for Q4 2013 was $(0.1) million, compared to $(0.3) million in Q4 2012. For the year ended December 31, 2013, Adjusted EBITDA was $(0.7) million, compared to $(1.0) million in 2012.

Loss from continuing operations for Q4 2013 was $(0.3) million. This compares to a loss from continuing operations of $(0.5) million for Q4 2012. For the year ended December 31, 2013, loss from continuing operations was $(1.1) million, compared to $(1.5) million in 2012.

Table A

Three months ended,
Dec 31
Year ended,
Dec 31
2013 2012 2013 2012
$ $ $ $
Adjusted EBITDA(1) (145,142 ) (339,497 ) (670,620 ) (942,166 )
Share based payments (77,340 ) (48,479 ) (260,080 ) (182,148 )
Interest expense (39,092 ) (29,150 ) (159,584 ) (144,038 )
Amortization (15,191 ) (39,098 ) (106,138 ) (169,089 )
Other income - - 85,774 -
Impairment loss - (31,763 ) - (31,763 )
Net Loss (276,765 ) (487,988 ) (1,110,648 ) (1,469,204 )
Notes:
(1) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, share-based payments, other income and impairment loss.

New By-Law

VersaPay further announces that the Company's board of directors (the "Board") has approved a new By-Law No. 1A ("the New By-Law") replacing the previous By-Law No.1. Of note, the New By-Law includes the addition of the advance notice provision (the "Provision") for nominations of directors by shareholders of the Company ("Shareholders") in certain circumstances. The Provision requires advance notice to VersaPay in circumstances where nominations of persons for election to the Board are made by the Shareholders other than pursuant to: (a) a requisition of a meeting made pursuant to the provisions of the CBCA, or (b) a Shareholder proposal made pursuant to the provisions of the CBCA.

Among other things, the Provision fixes a deadline by which holders of record of common shares must submit director nominations to the VersaPay prior to any annual or special meeting of Shareholders and sets forth the information that a Shareholder must include in the notice to the Company.

In the case of an annual meeting of Shareholders, notice to VersaPay must be provided not less than 30 days nor more than 65 days prior to the date of the annual meeting; provided, however, that in the event that the annual meeting is called for a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be made not later than the close of business on the 10th day following such public announcement. In the case of a special meeting of Shareholders (which is not also an annual meeting), notice to the Company must be provided no later than the close of business on the 15th day following the day on which the first public announcement of the date of the special meeting was made.

The Company believes that the Provision is considered to be good corporate governance. The Provision provides a clear process for Shareholders to follow for director nominations and sets out a reasonable time frame for nominee submissions and the provision of accompanying information. The purpose of the Provision is to treat all Shareholders fairly by ensuring that all Shareholders receive adequate notice of the nominations to be considered at a meeting and can thereby exercise their voting rights in an informed manner. In addition, the Provision should assist in facilitating an orderly and efficient meeting process.

The New By-Law is effective immediately and will be placed before Shareholders for ratification and confirmation at the next annual and special meeting of shareholders of the Company to be held on May 28, 2014. The implementation of the New By-Law also remains subject to receipt of conditional acceptance by the TSX Venture Exchange. The full text of the New By-Law may be obtained upon request by contacting the CEO of the Company at (647) 258-9378 or craig.oneill@versapay.com.

About VersaPay

VersaPay is a financial technology company that delivers payment solutions for businesses. Serving more than 2,500 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.

More information about VersaPay can be found at 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.

Neither the 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.

December 31,
2013
December 31,
2012
$ $
ASSETS
Current
Cash and cash equivalents 1,276,410 1,461,388
Funds held for merchants 4,063,599 1,726,284
Receivables 407,949 410,480
Prepaid expenses 33,441 27,973
5,781,399 3,626,125
Non-current
Equipment 194,999 290,449
Intangible assets 7,215 39,011
Total Assets 5,983,613 3,955,585
LIABILITIES
Current
Accounts payable and accrued liabilities 289,465 459,621
Funds due to merchants 4,063,599 1,726,284
Current portion of obligations under finance lease 24,367 37,492
4,377,431 2,223,397
Non-current
Obligations under finance lease, net of current portion 2,953 29,361
Promissory note 698,927 630,190
Total Liabilities 5,079,311 2,882,948
EQUITY
Share capital - 9,981,720
Reserve 260,080 1,497,517
Warrants - 372,260
Deficit - (10,778,860 )
Total Equity 260,080 1,072,637
Total Liabilities and Equity 5,339,391 3,955,585
Year ended December 31
2013 2012
$ $
Revenue
VersaPay Solutions 394,446 251,210
POS Merchant Services 17,148,642 16,620,832
17,543,088 16,872,042
Cost of Sales
VersaPay Solutions 263,424 223,257
POS Merchant Services 14,067,629 13,385,049
14,331,053 13,608,306
Gross Profit 3,212,035 3,263,736
Expenses
Depreciation and amortization 106,138 169,089
General and office expenses 571,710 677,061
Interest expense 159,584 144,038
Marketing and promotion 217,829 129,743
Professional and consulting fees 634,265 659,533
Rent and occupancy 239,572 320,248
Research and development 385,763 388,174
Salaries and benefits 1,833,516 2,031,143
Share based payments 260,080 182,148
Total Expenses 4,408,457 4,701,177
Other Income 85,774 -
Other Expenses
Impairment loss - 31,763
Net Loss and Comprehensive Loss for the Year (1,110,648 ) (1,469,204 )
Loss per share, basic $ (0.07 ) $ (0.10 )
Weighted average number of common shares outstanding, basic 15,676,845 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 - - - (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
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 - - - (1,110,648 ) (1,110,648 )
Shares Issued - - - - -
Exercise of options 284,917 (148,984 ) - - 135,933
Exercise of warrants 546,300 320,111 (320,111 ) - 546,300
Share based payments - 260,080 - - 260,080
Warrants expired - - - - -
At December 31, 2013 10,812,937 1,928,724 52,149 (11,889,508 ) 904,302
Year ended December 31,
2013 2012
$ $
Cash Provided By (Used In) Operating Activities
Net loss for the year (1,110,648 ) (1,469,204 )
Items not affecting cash:
Depreciation of equipment 74,343 110,536
Amortization of intangible assets 31,796 58,553
Impairment loss - 31,763
Interest accreted on promissory note 68,737 53,621
Loss on disposal of equipment 15,795 1,328
Share based payments 1,833,516 182,148
Change in non-cash working capital items
Receivables 2,531 6,674
Prepaid expenses (5,468 ) 712
Accounts payable and accrued liabilities (170,156 ) (76,120 )
740,446 (1,099,989 )
Cash Provided By (Used in) in Investing Activities
Acquisition of equipment (7,031 ) (25,425 )
Proceeds on disposal of equipment 12,343 7,753
5,312 (17,672 )
Cash Provided by (Used In) Financing Activities
Issuance of common shares, net of issuance costs 682,233 2,077,471
Finance lease payments (39,533 ) (57,919 )
642,700 2,019,552
Increase (decrease) in cash and cash equivalents 1,388,458 901,891
Cash and cash equivalents, beginning of year 1,461,388 559,497
Cash and cash equivalents, end of year 2,849,846 1,461,388
Cash and cash equivalents consist of the following:
2013 2012
$ $
Cash at bank and in hand 792,452 405,018
Demand deposits 483,958 1,056,370
1,276,410 1,461,388

Contact Information