VersaPay Announces 2013 Third Quarter and Year End Results

November 27, 2013 5:21 PM EST | Source: VersaPay Corporation

Toronto, Ontario--(Newsfile Corp. - November 27, 2013) - VersaPay Corporation (TSXV: 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

 Threemonths ended, Sept 30 Ninemonths ended, Sept 30
 2013 2012 2013 2012
Total Revenue $4.8M $4.6M $13.3M $12.7M
Cash Operating Expenses2 $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 tomerchants  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 andEquity  5,750,782   3,955,585  
       


   Threemonths ended, Sept 30   Ninemonths 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 ComprehensiveLoss for thePeriod  (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  
             

                
   IssuedCapital   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  
                      
                      
                      
                      
   IssuedCapital   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  
                


   Ninemonths ended, September 30  
   2013   2012  
    
          
CashProvidedBy (UsedIn) 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)
          
CashProvidedBy (Usedin) inInvesting Activities         
         Acquisition of equipment  (5,098)  (25,424)
         Proceeds on disposal of equipment  11,900   -  
   6,802   (25,424)
          
CashProvidedby (UsedIn) 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) incashandcashequivalents  (454,780)  1,106,761  
          
Cashandcashequivalents, beginning of period  1,461,388   559,497  
          
Cashandcashequivalents, endof period  1,006,608   1,666,258  
       

Craig O'Neill Hogan Mullally
CEO, VersaPay Corporation Investor Relations
craig.oneill@versapay.com hogan@sectorspeak.com
1-647-258-9378 1-204-479-2516

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