TORONTO, Nov. 28, 2014 /CNW/ - VersaPay Corporation (TSXV: VPY) ("VersaPay" or the "Company"), a leading provider of cloud-based invoicing, accounts receivable management and payment solutions, is pleased to report financial results for the third quarter of 2014. Revenue for Q3 2014 grew to $5.1 million from $4.8 million in Q3 2013. Revenue growth occurred across both of the Company's operating units, the VersaPay Solutions business and the POS Merchant Services business, as a result of accrued synergies.
Q3 2014 Highlights:
- Continued investment in VersaPay Solutions, including an expansion of the R&D, support and sales teams in the VersaPay Solutions business during Q3 2014
- Commenced a number of ARC™ customer projects, including a major pilot that will involve approximately 1,000 connected parties
- Solutions revenues grew by over 35%
- Teachers Life, a leading insurance provider for teachers throughout Ontario, went live on ARC™
- Grew total credit card processing volume to $253 million for Q3 2014 versus $237 million in Q3 2013, representing a record quarter
- Early repayment of all of the outstanding December 2010 secured subordinated promissory notes
- Art Mesher appointed chairman of VersaPay's board of directors, effective August 20, 2014
Subsequent to Q3 2014 Highlights:
- Experienced marketing executive, John McLeod joined VersaPay as Head of Marketing after 8 years with Desire2Learn Incorporated, a global software-as-a-service (SaaS)-based learning solutions provider.
Q3 2014 Financial Summary1
Three months ended, Sept 30 | Nine months ended, Sept 30 | |||
2014 | 2013 | 2014 | 2013 | |
Total Revenue | $5.1M | $4.8M | $14.3M | $13.3M |
Cash Operating Expenses2 | $1.7M | $1.0M | $4.5M | $3.1M |
Adjusted EBITDA 3 | $(0.8)M | $(0.1)M | $(1.9)M | $(0.5)M |
Net Loss | $(1.1)M | $(0.2)M | $(2.6)M | $(0.8)M |
Sept 30, 2014 | ||||
Cash | $4.0 M | |||
Notes:
- The unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 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.
- Cash operating expense is defined as operating expense excluding depreciation, amortization and share-based payments.
- Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, share-based payments, and other income and expense. See table A below.
"Q3 is a traditionally strong quarter for our POS Merchant Services business and this year has proven to be no exception", commented Craig O'Neill, VersaPay's CEO. "We are very pleased with the results achieved by our POS group, surpassing their record quarter in Q2 and renewing a number of major accounts. Further, we continue to make good progress in the VersaPay Solutions business as we implement our early customers and enhance the ARC™ platform based on valuable customer feedback. We are also delighted that Art Mesher has stepped into the role of Chairman and I look forward to leveraging his deep expertise in leading tech companies and his strong track record building shareholder value."
Q3 2014 Financial Review
Total revenues for Q3 2014 increased 6% to $5.1 million from $4.8 million in Q3 2013. Total revenues for the nine months ended September 30, 2014 increased 7% to $14.3 million from $13.3 million in the nine months ended September 30, 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 64% to $1.7 million in Q3 2014 from $1.0 million in the same period in 2013. Cash operating expense for the nine months ended September 30, 2014 was $4.5 million compared to $3.1 million for the nine months ended September 30, 2013, representing an increase of 44%.
Adjusted EBITDA for Q3 2014 was $(0.8) million, compared to $(0.1) million in Q3 2013. Adjusted EBITDA for the nine months ended September 30, 2014 was $(1.9) million, compared to $(0.5) million for the nine months ended September 30, 2013. Loss from continuing operations for Q3 2014 was $(1.1) million compared to a loss from continuing operations of $(0.2) million for Q3 2013. Loss from continuing operations for the nine months ended September 30, 2013 was $(2.6) million compared to $(0.8) million for the same period in 2013.
Table A
Three months ended Sept 30 | Nine months ended Sept 30 | |||
2014 | 2013 | 2014 | 2013 | |
$ | $ | $ | $ | |
Adjusted EBITDA 1 | (784,752) | (131,954) | (1,859,210) | (525,477) |
Share based payments | (90,364) | (57,018) | (420,281) | (182,740) |
Interest expense | (33,381) | (39,676) | (121,056) | (120,492) |
Amortization | (39,116) | (19,357) | (77,167) | (90,948) |
Other income (expense) | (137,078) | - | (137,078) | 85,774 |
Net Loss | (1,084,691) | (248,005) | (2,614,792) | (833,883) |
Notes: | |
1 | Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, share-based payments, and other income and expense. |
About VersaPay
VersaPay is a leading cloud-based invoice presentment and payment provider for businesses of all sizes. VersaPay's ARC™ and ARCPay™ software-as-a-service offerings allow businesses to easily deliver customized electronic invoices to their customers, to accept credit card and EFT payments and automatically reconcile payments to their ERP and accounting software. VersaPay is headquartered in Toronto, Canada and has operations in Montreal and New York.
More information about VersaPay can be found on the Company's website at www.versapay.com or under the Company's profile on SEDAR at www.sedar.com.
Forward Looking and Other Cautionary Statements
This news release contains "forward-looking information" which may include, but is not limited to, statements with respect to the activities, events or developments that the Company expects or anticipates will or may occur in the future. Such forward-looking information is often, but not always, identified by the use of words and phrases such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved.
These forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business. Management believes that these assumptions are reasonable. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, risks related 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 contained herein are made as of the date of this news release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information.
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.
Unaudited Condensed Interim Consolidated Statements of Financial Position
September 30, 2014 | December 31, 2013 | |
$ | $ | |
ASSETS | ||
Current | ||
Cash and cash equivalents | 3,938,538 | 1,276,410 |
Funds held for merchants | 7,236,736 | 4,063,599 |
Receivables | 415,640 | 407,949 |
Prepaid expenses | 113,849 | 33,441 |
11,704,763 | 5,781,399 | |
Non-current | ||
Restricted cash | 185,790 | - |
Property and equipment | 620,567 | 194,999 |
Intangible assets | 5,181 | 7,215 |
Total Assets | 12,516,301 | 5,983,613 |
LIABILITIES | ||
Current | ||
Accounts payable and accrued liabilities | 672,898 | 289,465 |
Funds due to merchants | 7,236,736 | 4,063,599 |
Current portion of obligations under finance lease | 7,496 | 24,367 |
7,917,130 | 4,377,431 | |
Non-current | ||
Obligations under finance lease, net of current portion | - | 2,953 |
Promissory note | - | 698,927 |
Lease incentive allowance | 204,529 | - |
Total Liabilities | 8,121,659 | 5,079,311 |
EQUITY | ||
Share capital | 17,078,083 | 11,133,048 |
Reserve | 1,440,795 | 1,608,613 |
Warrants | 380,064 | 52,149 |
Deficit | (14,504,300) | (11,889,508) |
Total Equity | 4,394,642 | 904,302 |
Total Liabilities and Equity | 12,516,301 | 5,983,613 |
Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
Three months ended, Sept 30 | Nine months ended, Sept 30 | |||||
2014 | 2013 | 2014 | 2013 | |||
$ | $ | $ | $ | |||
Revenue | ||||||
VersaPay Solutions | 128,154 | 94,535 | 354,076 | 258,149 | ||
POS Merchant Services | 4,951,821 | 4,701,409 | 13,908,629 | 13,059,478 | ||
5,079,975 | 4,795,944 | 14,262,705 | 13,317,627 | |||
Cost of Sales | ||||||
VersaPay Solutions | 96,710 | 72,467 | 249,433 | 192,277 | ||
POS Merchant Services | 4,143,883 | 3,885,612 | 11,531,702 | 10,682,276 | ||
4,240,593 | 3,958,079 | 11,781,135 | 10,874,553 | |||
Gross Profit | 839,382 | 837,865 | 2,481,570 | 2,443,074 | ||
Expenses | ||||||
Depreciation and amortization | 39,116 | 19,357 | 77,167 | 90,948 | ||
General and office expenses | 186,135 | 139,171 | 589,986 | 431,118 | ||
Interest expense | 33,381 | 39,676 | 121,056 | 120,492 | ||
Marketing and promotion | 96,812 | 49,704 | 289,874 | 174,222 | ||
Professional and consulting fees | 187,304 | 179,394 | 704,367 | 541,085 | ||
Rent and occupancy | 123,459 | 59,601 | 257,881 | 186,962 | ||
Research and development | 255,148 | 86,553 | 571,661 | 285,670 | ||
Salaries and benefits | 775,276 | 455,396 | 1,927,011 | 1,349,494 | ||
Share based payments | 90,364 | 57,018 | 420,281 | 182,740 | ||
Total Expenses | 1,786,995 | 1,085,870 | 4,959,284 | 3,362,731 | ||
Other Income | - | - | - | 85,774 | ||
Other Expenses | ||||||
Excess on settlement of promissory note | 137,078 | - | 137,078 | - | ||
Net Loss and Comprehensive Loss for the Period | (1,084,691) | (248,005) | (2,614,792) | (833,883) | ||
Loss per share, basic | $ (0.05) | $ (0.02) | $ (0.13) | $ (0.05) | ||
Weighted average number of common shares | 21,669,824 | 15,578,677 | 20,525,292 | 15,477,876 | ||
outstanding, basic | ||||||
Unaudited Condensed Interim Consolidated Statements of Changes in Equity
Share 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 |
At September 30, 2013 | 10,295,887 | 1,548,410 | 355,123 | (11,612,743) | 586,677 |
Share Capital | Reserve | Warrants | Deficit | Total Equity | |
$ | $ | $ | $ | $ | |
At December 31, 2013 (note 3) | 11,133,048 | 1,608,613 | 52,149 | (11,889,508) | 904,302 |
Net loss for the period | - | - | - | (2,614,792) | (2,614,792) |
Shares Issued | 3,974,951 | 87,335 | 360,503 | - | 4,422,789 |
Exercise of options | 1,511,409 | (501,634) | 19,561 | - | 1,029,336 |
Exercise of warrants | 284,875 | - | (52,149) | - | 232,726 |
Share based payments | 173,800 | 246,481 | - | - | 420,281 |
At September 30, 2014 | 17,078,083 | 1,440,795 | 380,064 | (14,504,300) | 4,394,642 |
Unaudited Condensed Interim Consolidated Statements of Cash Flows
Nine months ended September 30, | ||||
2014 | 2013 | |||
$ | $ | |||
Cash Provided By (Used In) Operating Activities | ||||
Net loss for the period | (2,614,792) | (833,883) | ||
Items not affecting cash: | ||||
Depreciation of property and equipment | 75,133 | 59,830 | ||
Amortization of intangible assets | 2,034 | 31,118 | ||
Amortization of lease incentive allowance | (5,244) | - | ||
Interest accreted on promissory note | 201,073 | 49,921 | ||
Loss on disposal of equipment | - | 15,795 | ||
Share based payments | 420,281 | 182,740 | ||
Change in non-cash working capital items | ||||
Receivables | (7,691) | (181) | ||
Prepaid expenses | (80,408) | (22,438) | ||
Accounts payable and accrued liabilities | 383,433 | (77,439) | ||
(1,626,181) | (594,537) | |||
Cash Provided By (Used in) in Investing Activities | ||||
Restricted cash | (185,790) | - | ||
Acquisition of property and equipment | (500,701) | (5,098) | ||
Proceeds on disposal of property and equipment | - | 11,900 | ||
(686,491) | 6,802 | |||
Cash Provided by (Used In) Financing Activities | ||||
Issuance of common shares, net of issuance costs | 5,684,851 | 165,183 | ||
Repayment of promissory note | (900,000) | - | ||
Finance lease payments | (19,824) | (32,228) | ||
Lease incentive allowance | 209,773 | - | ||
4,974,800 | 132,955 | |||
Increase (decrease) in cash and cash equivalents | 2,662,128 | (454,780) | ||
Cash and cash equivalents, beginning of period | 1,276,410 | 1,461,388 | ||
Cash and cash equivalents, end of period | 3,938,538 | 1,006,608 | ||
Cash and cash equivalents consist of the following: | ||||
2014 | 2013 | |||
$ | $ | |||
Cash at bank and in hand | 1,205,755 | 148,897 | ||
Demand deposits | 2,732,783 | 857,711 | ||
3,938,538 | 1,006,608 | |||
SOURCE VersaPay Corporation