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Press release from Marketwire

VersaPay Announces 2012 Third Quarter and Year Results

Tuesday, November 27, 2012

VersaPay Announces 2012 Third Quarter and Year Results09:30 EST Tuesday, November 27, 2012TORONTO, ONTARIO--(Marketwire - Nov. 27, 2012) - VersaPay Corporation (TSX VENTURE:VPY) ("VersaPay" or the "Company"), a provider of merchant credit and debit card payment processing and electronic money transfer (EMT) and electronic invoice presentment and payment (EIPP) solutions, today announced its financial and operational results for the three and nine month ended September 30, 2012. All amounts are in Canadian dollars unless otherwise noted.Q3 2012 HighlightsGrew year over year revenues by 7% and grew recurring revenues by 8%Adjusted EBITDA1 was $(0.09) million, as the Company continued investment in its cloud based electronic invoice presentment and payment platformLaunched the electronic invoicing feature on its proprietary platform, creating a cloud based electronic invoice presentment and payment solution for businesses.Announced, after the quarter, a strategic marketing partnership with MasterCard International Incorporated to increase MasterCard volumes in the B2B market. Q3 2012 Financial Summary2Three months ending September 30Nine months ending September 302012201120122011Recurring Revenues 3$4.6M$4.2M$12.7M$11.2MNon-recurring revenue 4$0.03M$0.08M$0.06M$0.2MTOTAL Revenue$4.2M$3.8M$12.7M$11.4MCash Operating Expenses 5$1.1M$1.0M$3.5M$2.9MAdjusted EBITDA 1$(0.09)M$0.1M$(0.6)M$(0.2)MIncome(loss) from continuing operations$(0.2)M$0.01M$(1.0)M$(0.6)MSeptember 30, 2012Cash$1.7 M"Our financial results in the third quarter of 2012 were driven primarily by our credit card processing business," said Bill McGill, CEO of VersaPay. "We continue to invest in our proprietary platform to drive future growth, and while this investment has negatively impacted on our near term earnings, we are very encouraged by the recent achievement of critical milestones. As a result, we are optimistic about our ability to earn an attractive return on this investment."Q3 and Year to Date 2012 Financial ReviewTotal revenues for Q3 2012 increased 7% to $4.6 million from $4.3 million in Q3 2011. Of this amount, recurring revenues for Q3 2012 increased 8% to $4.6 million from $4.2 million in Q3 2011. Total revenue for the nine months ended September 30, 2012 increased 12% to $12.7 million from $11.4 million for the same period in 2011. Of this amount, recurring revenues for the nine months ended September 30, 2012 increased 13% to $12.7 million from $11.1 million in 2011. 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 to $1.1 million from $0.9 million in Q3 2012 from the same period 2011. Cash operating expense for the nine months ended September 30, 2012 increased 20% to $3.5 million from $2.9 million in 2011.Adjusted EBITDA for Q3 2012 was $(0.09) million, compared to $0.1 million in Q3 2011. For the nine months ended September 30, 2012, Adjusted EBITDA was $(0.6) million, compared to $(0.2) million in 2011.Loss from continuing operations for Q3 2012 was $(0.2) million. This compares to an income from continuing operations of $0.01 million for Q3 2011. For the nine months ended September 30, 2012, loss from continuing operations was $(1.0) million, compared to $(0.6) million in 2011.1 Adjusted EBITDA is defined as Earnings Before Interest, Taxes, Depreciation, Amortization and Share-based payments. See table A. 2 Condensed interim financial statements and MD&A for the three and nine months ended September 30, 2012 will be available on the Company's website at and on SEDAR. 3 Defined as Transaction processing fees + VersaCard/EMT fees 4 Defined as Product sales (point-of-sale devices) and other 5 Defined as operating expense excluding amortization and share-based paymentsTable AThree months ending September 30Nine months ending September 302012201120122011Adjusted EBITDA 1(85,720)146,979(599,563)(169,046)Stock-based compensation(76,581)(48,271)(133,669)(151,420)Interest expense(39,229)(38,272)(117,992)(112,019)Amortization(42,177)(46,378)(129,991)(127,929)Loss from continuing operations(243,707)14,058(981,215)(560,414)About VersaPay VersaPay's financial technology enables businesses and consumers across Canada to accept and process credit, debit and gift card transactions. As a payment services and financial technology company serving more than 2,500 Canadian businesses, VersaPay, in conjunction with its partners, provides the hardware, technology, infrastructure and support services that businesses of all types require to accept and process electronic payments from their consumers and clients.While its core business is payment processing services, VersaPay also provides enhanced financial technology solutions such as VersaPay EMT - the Company's proprietary Electronic Bill Presentment and Payment solution - which enables merchants and consumers to easily transact with one another.VersaPay is headquartered in Toronto, Canada and has operations in Montreal, Vancouver and New York. To learn more about VersaPay, visit Looking and Other Cautionary StatementsThis 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.September 30, 2012December 31, 2011$$ASSETSCurrentCash and cash equivalents1,666,258559,497Funds held for merchants1,221,688443,005Receivables443,583417,154Prepaid expenses22,42528,6853,353,9541,448,341Non-currentEquipment355,752397,530Intangible assets53,64997,5643,763,3551,943,435LIABILITIESCurrentAccounts payable and accrued liabilities335,592535,741Funds due to merchants1,221,688443,005Current portion of obligations under finance lease41,75053,0261,599,0301,031,772Non-currentObligations under finance lease, net of current portion36,66652,872Promissory note615,512576,569Total liabilities2,251,2081,661,213EQUITYShare capital9,981,7207,891,062Reserve1,449,0371,010,525Warrants372,261690,291Deficit(10,290,871)(9,309,656)Total equity1,512,147282,222Total liabilities and equity3,763,3551,943,435Three months ended, Sept 30Nine months ended, Sept 302012201120122011$$$$RevenueTransaction processing fees4,505,7034,164,28812,491,46210,978,346Product sales and other28,05680,31555,690212,663 VersaCard/EFT and EMT Fees69,21471,311182,373201,0824,602,9734,315,91412,729,52511,392,091ExpensesCost of services3,670,3063,329,37210,069,4788,801,314Cost of products sold and other30,50631,49450,641148,153 VersaCard/EFT and EMT costs41,72839,363117,909102,171Depreciation and amortization42,17746,378129,991127,929Bank charges and interest39,22938,272117,992112,019Consulting fees58,66051,339224,229115,089General and administrative94,08676,544335,360252,199Marketing and promotion10,18242,47544,515126,719Professional fees96,68135,480300,853231,636Rent and occupancy73,22872,109241,743215,789Research and development91,06921,293274,17444,013Salaries and benefits453,430362,6021,435,5241,227,602Share based payments76,58148,271133,669151,420Telecom and wireless connection fees61,01978,869182,895214,443Travel7,79827,99551,76782,0094,846,6804,301,85613,710,74011,952,505Net Income (loss) and comprehensive income (loss) for the period(243,707)14,058(981,215)(560,414)Income (loss) per shareBasic$(0.02)$0.00$(0.07)$(0.04)Diluted$(0.02)$0.00$(0.07)$(0.04)Weighted average number of common shares outstanding, basic and diluted15,337,49813,009,04414,587,85212,977,291Issued CapitalReserveWarrantsDeficitTotal EquityAs at December 31, 2011$7,891,062$1,010,525$690,291$(9,309,656)$282,222Net loss for the period---(981,215)(981,215)Shares Issued1,780,202-54,270-1,834,472Exercise of options310,456(67,456)--243,000Share based payments-133,668--133,668Warrants expired-372,300(372,300)--At September 30, 2012$9,981,720$1,449,037$372,261$(10,290,871)$1,512,147Issued CapitalReserveWarrantsDeficitTotal EquityAs at December 31, 2010$7,819,002$865,644$696,619$(8,386,233)$995,032Net loss for the period---(560,414)(560,414)Exercise of options72,060(55,060)--17,000Share based payments-151,420--151,420Warrants expired-6,328(6,328)--At September 30, 2011$7,891,062$968,332$690,291$(8,946,647)$603,038Nine months ended, September 3020122011$$Cash Provided By (Used In) Operating ActivitiesNet loss for the period(981,215)(560,414)Items not affecting cash:Depreciation of equipment86,07685,799Amortization of intangible assets43,91542,130Interest accreted on promissory note38,94230,378Share based payments133,669151,420Change in non-cash working capital itemsReceivables(26,429)(35,079)Prepaid expenses6,260(935)Accounts payable and accrued liabilities(200,149)(14,911)(898,931)(301,612)Cash (Used in) in Investing ActivitiesAcquisition of equipment(25,424)(79,862)Intangible assets-(5,000)(25,424)(84,862)Cash Provided by (Used In) Financing ActivitiesIssuance of common shares, net of issuance costs2,077,47217,000Finance lease payments(46,356)(42,437)2,031,116(25,437)Increase (decrease) in cash and cash equivalents1,106,761(411,911)Cash and cash equivalents, beginning of period559,4971,121,816Cash and cash equivalents, end of period1,666,258709,905FOR FURTHER INFORMATION PLEASE CONTACT: 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. Contact Information: VersaPay CorporationBill McGillCEO1-647-258-9378bill.mcgill@versapay.comHogan MullallyInvestor