VersaPay Corporation

TSX VENTURE : VPY


VersaPay Corporation

May 28, 2014 17:00 ET

VersaPay Reports Q1 2014 Results

TORONTO, ONTARIO--(Marketwired - May 28, 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 the first quarter of 2014. Revenue for Q1 2014 grew to $4.3 million from $4.1 million in the previous year. Revenue growth occurred across both of the company's operating units, the POS Merchant Services business and the VersaPay Solutions business.

Q1 2014 Highlights:

  • Completed a $5 million bought-deal financing in order to further develop and market its Arc™ electronic invoice presentment and payment software and its ArcPay™ electronic payments service
  • WinPak Ltd.'s Winnipeg manufacturing division became a VersaPay Solutions customer, selecting the Arc™ platform to automate its accounts receivable processes
  • Grew total credit card processing volume to $220 million for Q1 2014 versus $208 million in Q1 2013
  • Launched an Arc™ direct marketing campaign in Canada and the United States that is generating higher than expected levels of interest from VersaPay's target market.

Subsequent to Q1 2014 Highlights:

  • Heartland Payment Systems, the fifth largest payment processor in the United States completes integration with Arc™ and rolls out reseller program to its world class sales distribution network.

Q1 2014 Financial Summary(1)

Three months ended, March 31
2014 2013
Total Revenue $ 4.3M $ 4.1M
Cash Operating Expenses(2) $ 1.3M $ 1.0M
Adjusted EBITDA(3) $ (0.5)M $ (0.3)M
Net Loss $ (0.8)M $ (0.3)M
March 31, 2014
Cash $ 5.4 M
Notes:
1 The unaudited condensed interim consolidated financial statements for the three months ended March 31, 2014 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, and other income. See table A below.

"Q1 saw the realization of several key milestones for the company," commented Craig O'Neill, VersaPay's CEO. "In launching our go-to-market plan for Arc™, securing financing to fund our growth plans, significantly strengthening our R&D team, and implementing our first major Arc™ partnership with Heartland, we have made solid progress towards our objectives for the year. In addition, we are very pleased with the expanding sales pipeline we are witnessing in both businesses, Solutions and POS. We expect this trend to continue as we increase our sales and marketing investment and as our strategic partners, Heartland Payment Systems in the U.S. and TD Merchant Services in Canada, gain market traction."

Q1 2014 Financial Review

Total revenues for Q1 2014 increased 5% to $4.3 million from $4.1 million in Q1 2013. 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 22% to $1.3 million from $1.1 million in Q1 2014 from the same period in 2013.

Adjusted EBITDA for Q1 2014 was $(0.5) million, compared to $(0.3) million in Q1 2013. Loss from continuing operations for Q1 2014 was $(0.8) million. This compares to a loss from continuing operations of $(0.3) million for Q1 2013.

Table A

Three months ended, March 31
2014 2013
$ $
Adjusted EBITDA(1) (504,246 ) (251,622 )
Share based payments (260,016 ) (61,172 )
Interest expense (43,145 ) (39,810 )
Amortization (16,643 ) (36,615 )
Other income - 62,746
Net Loss (824,050 ) (326,473 )
Notes:
1 Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, share-based payments, and other income.

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.

March 31,
2014
December 31,
2013
$ $
ASSETS
Current
Cash and cash equivalents 5,368,355 1,276,410
Funds held for merchants 4,644,076 4,063,599
Receivables 450,692 407,949
Prepaid expenses 96,440 33,441
10,559,563 5,781,399
Non-current
Equipment 213,817 194,999
Intangible assets 6,537 7,215
Total Assets 10,779,917 5,983,613
LIABILITIES
Current
Accounts payable and accrued liabilities 483,719 289,465
Funds due to merchants 4,644,076 4,063,599
Current portion of obligations under finance lease 19,889 24,367
5,147,684 4,377,431
Non-current
Obligations under finance lease, net of current portion - 2,953
Promissory note 718,949 698,927
Total Liabilities 5,866,633 5,079,311
EQUITY
Share capital 15,504,300 10,812,937
Reserve 2,057,557 1,928,724
Warrants 64,985 52,149
Deficit (12,713,558 ) (11,889,508 )
Total Equity 4,913,284 904,302
Total Liabilities and Equity 10,779,917 5,983,613
Three months ended,
March 31
2014 2013
$ $
Revenue
VersaPay Solutions 97,866 71,049
POS Merchant Services 4,236,944 4,066,924
4,334,810 4,137,973
Cost of Sales
VersaPay Solutions 69,984 57,359
POS Merchant Services 3,499,007 3,292,057
3,568,991 3,349,416
Gross Profit 765,819 788,557
Expenses
Depreciation and amortization 16,643 36,615
General and office expenses 198,761 145,257
Interest expense 43,145 39,810
Marketing and promotion 96,262 45,137
Professional and consulting fees 221,332 211,472
Rent and occupancy 74,601 75,112
Research and development 137,543 103,257
Salaries and benefits 541,566 459,944
Share based payments 260,016 61,172
Total Expenses 1,589,869 1,177,776
Other Income - 62,746
Net Loss and Comprehensive Loss for the Period (824,050 ) (326,473 )
Loss per share, basic $ (0.04 ) $ (0.02 )
Weighted average number of common shares outstanding, basic 18,943,216 15,367,770
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
Issued
Capital
Reserve Warrants Deficit Total
Equity
$ $ $ $ $
At December 31, 2013 10,812,937 1,928,724 52,149 (11,889,508 ) 904,302
Net loss for the period - - - (824,050 ) (824,050 )
Shares Issued 4,367,337 - 55,453 - 4,422,790
Exercise of options - - - - -
Exercise of warrants 150,226 42,617 (42,617 ) - 150,226
Share based payments 173,800 86,216 - - 260,016
Warrants expired - - - - -
At March 31, 2014 15,504,300 2,057,557 64,985 (12,713,558 ) 4,913,284
Three months ended
March 31,
2014 2013
$ $
Cash Provided By (Used In) Operating Activities
Net loss for the period (824,050 ) (326,473 )
Items not affecting cash:
Depreciation of equipment 15,965 21,977
Amortization of intangible assets 678 14,638
Interest accreted on promissory note 20,022 15,618
Share based payments 260,016 61,172
Change in non-cash working capital items
Receivables (42,743 ) (50,591 )
Prepaid expenses (62,999 ) (10,431 )
Accounts payable and accrued liabilities 194,254 29,012
(438,857 ) (245,078 )
Cash Provided By (Used in) in Investing Activities
Acquisition of equipment (34,783 ) (660 )
(34,783 ) (660 )
Cash Provided by (Used In) Financing Activities
Issuance of common shares, net of issuance costs 4,573,016 10,933
Finance lease payments (7,431 ) (11,718 )
4,565,585 (785 )
Increase (decrease) in cash and cash equivalents 4,091,945 (246,523 )
Cash and cash equivalents, beginning of period 1,276,410 1,461,388
Cash and cash equivalents, end of period 5,368,355 1,214,865

Cash and cash equivalents consist of the following:

2014 2013
$ $
Cash at bank and in hand 4,882,478 357,154
Demand deposits 485,877 857,711
5,368,355 1,214,865

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