VersaPay Announces 2010 Second Quarter Results and Leadership Transition
- Company achieved 69% year-over-year growth in recurring revenue -
TORONTO, Aug. 25 /CNW/ - VersaPay Corporation (TSXV: VPY) ("VersaPay" or the "Company"), a provider of merchant credit, debit, gift and loyalty card payment processing and electronic funds transfer solutions, today announced its financial and operational results for the three- and six-month periods ended June 30, 2010. In the quarter, VersaPay completed the sale of its 75% ownership in Positive Inc. As such, results are reported on a continuing operations basis. All amounts are in Canadian dollars unless otherwise noted. In addition, the Company today announced that Bill McGill has been appointed Chief Executive Officer of VersaPay and a member of the Company's Board of Directors, effective immediately.
Q2 2010 Highlights
- Increased total gross quarterly transaction value processed 99% to
$177 million from $89 million in Q2 2009(1)
- Monthly gross transaction value processed was $65 million for
June 2010
- Launched latest version of VersaPay EFT platform, the Company's
proprietary Electronic Funds Transfer (EFT) platform
Q2 2010 Financial Summary(2)
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Q2 2010 Q2 2009 H1 2010 H1 2009
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Recurring revenue(3) $3.0M $1.8M $5.5M $3.2M
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Non-recurring revenue(4) $0.1M $0.2M $0.3M $0.3M
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Total Revenue $3.1M $1.9M $5.7M $3.5M
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Expenses $3.6M $2.1M $7.1M $3.8M
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Adjusted EBITDA(5) $(0.5)M $0.03M $(1.0)M $(0.06)M
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Income (loss) from
continuing operations $(0.6)M $(0.2)M $(1.4)M $(0.3)M
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Cash and cash equivalents $0.9M $0.2M
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"Driven by strong sales in our credit and debit card processing business, recurring revenue increased 69% compared to Q2 last year," said Bill McGill, CEO of VersaPay. "The new merchants we signed in the quarter represent approximately $120 million in annual processing volume(6), which underscores our continuing growth momentum. In the quarter, we incurred more than $0.1 million in one-time expenses that negatively impacted our profitability. We also implemented cost controls, which we expect will start to be reflected in our Q3 2010 results."
Mr. McGill continued: "Late in the second quarter, we released the latest version of our VersaPay EFT platform, increasing the breadth of our payment processing solutions. VersaPay EFT's electronic sign-up, batch processing capabilities and security features are key differentiators that will enable us to successfully compete in the growing EFT market. We are excited about the opportunities ahead of us. With the strength of our team and the quality of solutions, we are positioned for further growth."
Leadership Transition Update
Subsequent to quarter end, VersaPay's Board of Directors appointed Bill McGill Chief Executive Officer of VersaPay. Mr. McGill has also joined the Company's Board.
"We are very pleased with the job Bill has done as Acting CEO of VersaPay through this transitional period," said Jason Gurandiano, Chairman of VersaPay's Board of Directors. "As demonstrated by the results for the quarter, Bill has been able to drive the Company's top-line growth while also carefully managing operating costs, which makes him the ideal candidate to lead the organization going forward. The Board has great confidence in Bill's abilities to effectively capitalize on the growth opportunities available to VersaPay and continue to strengthen the Company's results, positioning VersaPay for long-term success."
Q2 2010 Financial Review
Total revenue for Q2 2010 increased 60% to $3.1 million from $1.9 million in Q2 2009. The year-over-year improvement was driven primarily by growth in the Company's transaction processing fees. Recurring revenue for Q2 2010 increased 69% to $3.0 million, or 96% of total revenue, compared to $1.8 million, or 91% of total revenue, in Q2 2009.
Total expenses for Q2 2010 were $3.6 million, compared to $2.1 million in Q2 2009. The year-over-year increase predominantly reflects the Company's investment in the business to support its expanding merchant customer base and drive its long-term growth. In addition, in Q2 2010, VersaPay incurred more than $0.1 million in one-time costs related to the sale of the Company's 75% ownership in Positive Inc, the launch of the latest version of the Company's EFT platform and management changes.
Adjusted EBITDA for Q2 2010 was $(0.5) million, compared to $0.03 million in Q2 2009, reflecting VersaPay's increased investment in the business, which was partially offset by the Company's revenue growth. Excluding the one-time costs the Company incurred in the quarter, adjusted EBITDA for Q2 2010 was $(0.4) million.
Loss from continuing operations for Q2 2010 was $(0.6) million, and excluding the one-time costs VersayPay incurred in the quarter, it was $(0.5) million. This is compared to a loss from continuing operations of $(0.2) million for Q2 2009. For Q2 2010, reflecting a $(0.03) million loss from discontinued operations, net loss was $(0.5) million, or $(0.05) per share. For Q2 2009, reflecting a $0.02 million gain from discontinued operations, net loss was $(0.2) million, or $(0.03) per share.
As at June 30, 2010, VersaPay had cash and cash equivalents of $0.9 million, compared to $0.2 million as at December 31, 2009.
1 Total quarterly gross transaction value processed represents the
total volume of credit and debit card transactions processed by
VersaPay's merchant customers
2 A complete set of financial statements and notes and MD&A for the
three-month period ended June 30, 2010 will be available on the
Company's website at www.versapay.com and on SEDAR.
3 Defined as Transaction processing fees + VersaCard/EFT fees
4 Defined as Product sales (point-of-sale devices) and other
5 Adjusted EBITDA is defined as Earnings Before Interest, Taxes,
Depreciation, Amortization and Stock-based compensation. See table A.
6 Total annualized volume added is the combined processing volume that
all merchant relationships added over a specific period of time are
expected to deliver over a 12-month period. This figure is calculated
based on historical processing trends and estimates provided by the
merchant during the application process. As such this figure is
subject to significant variability and revision.
Table A
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Q2 2010 Q2 2009 H1 2010 H1 2009
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Adjusted EBITDA $(517,539) $32,816 $(1,027,755) $(62,714)
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Interest expense - - - -
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Amortization $(25,833) $(10,955) $(51,571) $(21,489)
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Stock-based
compensation $(12,787) $(202,925) $(303,736) $(202,925)
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Loss from continuing
operations $(556,159) $(181,064) $(1,383,062) $(287,128)
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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 VersaEFT - 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 Vancouver, Canada and has operations in Toronto and Montreal. 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.
Unaudited Consolidated Balance Sheets
-------------------------------------
(Unaudited) (Audited)
As at As at
June 30 December 31
--------------------------
2010 2009
$ $
--------------------------
ASSETS
Current
Cash and cash equivalents 883,546 206,763
Funds held for merchants 1,896,050 365,518
Receivables 461,213 307,675
Prepaid expenses 21,008 17,133
Current assets of discontinued operations - 29,133
--------------------------
3,261,817 926,222
Share issue costs - 425,536
Equipment 361,296 318,735
Intangible assets 167,520 101,592
Non-current assets of discontinued operations - 161,012
--------------------------
3,790,633 1,933,097
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LIABILITIES
Current
Accounts payable and accrued liabilities 719,140 1,259,384
Funds due to merchants 1,896,050 365,518
Deferred revenue 7,270 9,688
JG Capital Loan - 225,000
Current portion of obligation
under capital lease 37,160 36,819
Current liabilities of discontinued operations - 76,728
--------------------------
2,659,620 1,973,137
Obligation under capital lease,
net of current portion 78,054 97,546
--------------------------
2,737,674 2,070,683
--------------------------
Non-controlling interest in Positive Inc. - 7,569
--------------------------
SHAREHOLDERS' EQUITY (DEFICIENCY)
Share capital 7,064,649 4,872,073
Shares subscriptions received - 288,958
Contributed surplus 972,254 618,955
Warrants 388,160
Deficit -7,372,104 -5,925,141
--------------------------
1,052,959 -145,155
--------------------------
3,790,633 1,933,097
Unaudited Consolidated Statement of Loss, Comprehensive Loss and Deficit
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3 months ended June 30 6 months ended June 30
2010 2009 2010 2009
$ $ $ $
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Revenue
Transaction
processing fees 2,908,948 1,677,467 5,356,210 3,073,072
Product sales
and other 110,065 164,975 255,442 291,004
VersaCard/EFT fees 52,319 74,389 97,172 129,879
-------------------------- -------------------------
3,071,332 1,916,831 5,708,824 3,493,955
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Expenses
Cost of services 1,974,416 1,117,906 3,584,112 2,034,189
Cost of products
sold and other 343,313 110,977 713,820 358,470
VersaCard/EFT costs 15,453 44,137 27,014 70,248
Amortization 25,833 10,955 51,571 21,489
Bad debts 10,516 1,650 11,694 1,652
Bank charges
and interest 2,246 11,807 (12,192) 25,058
Consulting fees 55,045 139,887 147,129 280,399
General and
administrative 79,096 50,522 176,124 75,409
Marketing and promotion 48,948 14,308 110,246 30,230
Professional fees 251,296 81,535 339,619 101,727
Rent and occupancy 72,159 49,156 139,653 99,758
Salaries and benefits 643,074 221,624 1,243,283 393,749
Stock based
compensation 12,787 202,925 303,736 202,925
Telecom and wireless
connection fees 71,990 18,055 194,167 47,801
Travel 21,319 22,451 61,910 37,979
-------------------------- -------------------------
3,627,491 2,097,895 7,091,886 3,781,083
-------------------------- -------------------------
Loss from continuing
operations (556,159) (181,064) (1,383,062) (287,128)
Results from
discontinued
operations (32,221) 17,539 (23,504) (11,325)
Loss on Sale of business - - - -
Non-controlling interest 5,905 (4,397) 1,667 6,076
-------------------------- -------------------------
Net loss and
comprehensive loss
for the period (582,475) (167,922) (1,404,899) (292,377)
Deficit, beginning
of period (6,789,629) (4,708,347) (5,925,141) (4,583,892)
Charges on share
purchase warrant
modification - - (42,064) -
-------------------------- -------------------------
Deficit, end of
period (7,372,104) (4,876,269) (7,372,104) (4,876,269)
-------------------------- -------------------------
-------------------------- -------------------------
Loss per Share -
basic and fully
diluted $ (0.04) $ (0.03) $ (0.11) $ (0.03)
Weighted average
number of common
shares outstanding 12,872,844 8,523,159 12,606,100 8,677,866
Unaudited Consolidated Statement of Cash Flow
---------------------------------------------
3 months ended June 30 6 months ended June 30
2010 2009 2010 2009
-------------------------- -------------------------
$ $ $ $
-------------------------- -------------------------
Cash Provided By
(Used In) Operating
Activities
Net loss for
the period (582,475) (167,922) (1,404,899) (292,377)
Items not affecting
cash:
- amortization of
equipment 25,833 28,626 51,571 39,160
- cancellation of
JG Capital loan
interest - - 14,271 -
- stock based
compensation 12,787 202,925 303,736 202,925
- non controlling
interest (11,806) 4,397 (7,569) (6,076)
- discontinued
operations - (9,219) (10,212) (13,103)
Change in non cash
working capital items
receivables (33,388) (366,368) (138,120) (132,894)
inventory - (1,386) - (1,386)
prepaid expenses (3,882) 3,554 (3,882) 163
accounts payable and
accrued liabilities 86,512 (105,469) (540,241) 13,271
deferred revenue (1,209) 579 (2,418) 1,996
-------------------------- -------------------------
(507,628) (410,283) (1,737,763) (188,321)
-------------------------- -------------------------
Cash Provided by (Used In)
Financing Activities
issuance of common
shares, net of
issuance costs 55,131 409,724 2,592,263 415,816
capital lease
payments (5,928) (2,769) (17,658) (5,498)
-------------------------- -------------------------
49,203 406,955 2,574,605 410,318
-------------------------- -------------------------
Cash Provided by (Used in)
Used in Investing
Activities
acquisition of
equipment (32,370) (16,354) (94,132) (21,369)
developed technology (31,168) - (65,928) -
discontinued operations - 23,834 - 17,856
-------------------------- -------------------------
(63,538) 7,480 (160,060) (3,513)
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(Decrease) increase
in cash and cash
equivalents (521,963) 4,152 676,782 218,484
Cash and cash
equivalents, beginning
of period 1,405,508 553,141 206,763 338,809
-------------------------- -------------------------
Cash and cash
equivalents,
end of period 883,545 557,293 883,545 557,293
-------------------------- -------------------------
Supplementary Cash
Flow Information:
Interest paid - 4,119 - 8,471
%SEDAR: 00029483E
For further information: Bill McGill, CEO, VersaPay Corporation, [email protected], 1-647-258-9378; Kristen Dickson, Investor Relations, The Equicom Group, [email protected], 1-416-815-0700 ext. 273
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